Medicare Advantage cuts likely to vary by market

The consequences of Medicare Advantage cuts over the next 10 years could vary significantly by market, according to a report by Kaiser Health News and Health News Florida. Congress cut $136 billion over 10 years from the Medicare Advantage program in order to finance health reform. The new funding formula used to implement those cuts could have surprising effects, according to Medicare experts interviewed by the two news organizations.

For example, although the highest payments will be for plans in counties with the lowest costs for traditional Medicare plans, the funding cuts still could lead some Medicare Advantage plans to reduce operations in those areas. And although plans in higher-cost counties will get the lowest rates, many might continue to operate as they do today. The reason, according to Kaiser Health News and Health News Florida, is that markets with high traditional Medicare spending often have a higher number of customers and providers, so insurers have more opportunities to find savings. Lower-cost areas don't always offer the same opportunities because they often have smaller populations and less provider competition.

Although there will be winners and losers under the new funding system, it appears to be fair, consultant John Gorman said in the article. To keep costs down and make a profit, he believes plans will have to focus on medical management.

To learn more:
- read the Kaiser Health News/Health News Florida report