Medicare Advantage insurers could lose $11B in proposed cuts

Insurers providing Medicare Advantage plans could lose a total of $11 billion in cuts to the program's payment rates and medical loss ratios.

In a proposed rule issued Friday, the Centers for Medicare & Medicaid Services announced that it wants to decrease payments per person for Medicare Advantage plans by more than 2 percent in 2014.

Although the industry anticipated cuts to Medicare Advantage, most companies and analysts didn't expect that insurers could take a total pay cut of roughly 7 percent to 8 percent next year, the Washington Post Wonkblog reported.

"There's no way around it. The proposed Medicare Advantage rates for 2014 are really, really bad," Citi analyst Carl McDonald said in a research note, according to the Associated Press.

What's more, some companies could pull out of the Medicare Advantage market if the cuts become final. UnitedHealth, for example, might exit many of the Medicare Advantage markets it currently operates in, Reuters reported.

To learn more:
- here's the CMS announcement
- see the Washington Post Wonkblog article
- read the Associated Press article
- check out the Reuters article