AHIP warns 5.9% payment cut will hit Medicare Advantage plans

Medicare Advantage organizations will see a 5.9 percent payment cut in 2015, which could jeopardize their sustainability, according to a new report from America's Health Insurance Plans--much higher than federal estimates.

Last week, the Centers for Medicare & Medicaid Services proposed a reduction in payments to insurers in 2015 for Medicare Advantage plans. The agency said those cuts would amount to about 1.9 percent.

But AHIP claims the government's payment update would cumulatively affect rates, FierceHealthPayer reported.

So AHIP issued a report to tell the "whole story." The payment changes will actually amount to a 5.9 percent cut, including a 3.9 percent reduction in payment and an average 2 percent reduction due to proposed policy changes to health risk assessment, AHIP says. Those reductions will lead to benefit cuts, higher premiums, plans exiting local markets, provider network changes and small enrollment, the report claims.

Under the proposed policy change to health risk assessment, CMS would eliminate home assessment visit diagnoses, which AHIP defined as clinical encounters Medicare Advantage organizations use to better manage and coordinate care through the early identification of health conditions. Getting rid of home assessment diagnoses would lower Medicare Advantage plans' risk scores and subsequently payments.  

The 5.9 percent payment cut for 2015 also includes plans losing 0.25 percent a year for a coding intensity adjustment.

"CMS should keep Medicare Advantage payment rates flat next year to protect seniors from harmful cuts that would cause them to face higher costs and lose benefits and choices upon which they rely today," AHIP President and CEO Karen Ignagni said in an announcement.

"[Y]ou take six plus six and you are looking at a more than double-digit cut over two years," she said of the 2015 payment cut coupled with the 6 percent reduction in 2014, MedPage Today reported.

AHIP's call to keep Medicare Advantage payment rates flat in 2015 has received strong support from senators, the U.S. Chamber of Commerce, employers, providers and consumers.

To learn more:
- read the AHIP announcement and report (.pdf)
- here's the MedPage article