Policy experts debate Medicare Advantage funding cuts

During a Congressional hearing on Wednesday, policy experts debated in their testimonies whether the healthcare reform law's funding cuts to Medicare Advantage insurers will lead to higher costs and lower enrollment.

"Much of [Medicare Advantage's] value is based on the plans' ability to innovate and offer needed additional benefits, both of which are compromised in the face of large payment rate cuts," Douglas Holtz-Eakin, president of the American Action Forum, said before the House Energy and Commerce Health Subcommittee.

One of the unintended effects of the cuts in funding for Medicare Advantage plans has been insurers dropping thousands of providers from their networks to offset the upcoming decrease in funds. UnitedHealth, the largest Medicare Advantage insurer in the country, cut 19 percent of providers from its Medicare Advantage network in Connecticut, for example, FierceHealthPayer previously reported.

"Additional layered reductions cut deeply into the MA program and flow to patients in the form or fewer physician choices, fewer benefits and increased patient costs," Bob Margolis, CEO of HealthCare Partners, said in his testimony. "The cuts have the net effect of pushing seniors away from MA and into the fragmented FFS delivery model."

However, not everyone speaking before the House sucommittee agreed. "While there appears to be some slimming of MA provider networks this year, these adjustments are an inherent risk of any managed care system, have happened in the past, and will happen in the future," Medicare Rights Center President Joe Baker said.

He advocated for reducing the number of insurers participating in the Medicare Advantage program, saying there are too many insurers and plans available without enough discernable differences between them.

Baker also claimed the Medicare Advantage program has strengthened since the reform law, boosting plans' efficiency and quality. Despite predictions that premiums would rise and enrollment would decrease because of Medicare Advantage cuts, Baker said the opposite has proven true: Membership in Medicare Advantage plans has increased 30 percent in the last three years.

Marsha Gold, senior fellow with Mathematica Policy Research, likewise said the funding cuts have actually improved Medicare Advantage plans. "Payment changes under the ACA have improved the efficiency of the Medicare Advantage program and may have encouraged plans to enhance quality--all while continuing to increase MA enrollment through plans and benefit packages that beneficiaries find attractive," she said.

To learn more:
- read the hearing testimonies

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