When the Medicare Advantage program was enacted, health insurers claimed it would reduce Medicare spending. But, Medicare Advantage has always cost significantly more per person than Traditional Medicare, largely because of a defective payment system that the insurance industry has been able to game. In an election year, will the administration finalize its proposed rate increase for 2025 as is or succumb to pressures from the insurers that will enhance their profits while weakening Medicare?
The Centers for Medicare and Medicaid Services (CMS) says that payments to MA plans will increase 3.7 percent ($16 billion) from 2024 to 2025. The insurance industry falsely claims CMS’ proposed adjustments to a defective coding system would result in a 0.2% pay cut in 2025 because it doesn’t factor in the 3.8 percent increase it will receive from gaming the payment system. The defective payment system leads to $88 billion in overpayments to insurers offering Medicare Advantage this year alone and rises each year.
The insurers are also posturing. They claim that MA enrollees are using more health care services, so the proposed rule could lead to higher costs and fewer benefits. Insurers can always claim that a payment rule could lead to cuts; the additional benefits the insurers offer are within their control, which is the problem. But, there is every reason to believe insurers will not cut benefits next year, as the insurers are profiting handsomely from MA and want to increase enrollment in MA. Last year, CMS still caved and gave the insurers a 3.3 percent rate increase, after proposing a 1 percent increase.
If CMS is listening to the Medicare Payment Advisory Commission, experts, advocates and other independent advisors, it must hold the line on its proposed rate for 2025 or reduce it further, in order to protect the Medicare Trust Fund and the Medicare program. Unfortunately, the rule does not stop the insurers’ “upcoding” that results in significantly higher payments for enrollees with multiple diagnostic codes, who do not receive additional care. Moreover, CMS continues to pay MA plans based on the costs of care for Traditional Medicare enrollees, even though Traditional Medicare enrollees tend to be significantly less healthy, leading to an additional 14 percent higher MA payments.
Advocacy groups submitted more than 25,000 comments opposing any rate increase and suggesting further cuts are in order. Scores of independent experts submitted similar comments. The insurers were able to get 13,000 people to offer a bunch of pablum to CMS about the proposed rate for 2025. CMS will finalize the 2025 Medicare Advantage payment rate rule on April 1.
CMS should follow the advice of independent experts:
- Create a new payment system that “is resistant to gaming.”
- Don’t allow the insurers to benefit from the fact that traditional Medicare enrollees are less healthy than MA enrollees.
- Advocate for Congress to strengthen traditional Medicare so that it is on a more level playing field with MA.
If CMS does not stick to its guns on the rate increase, people can expect to see Medicare premiums and out-of-pocket costs increase even further as traditional Medicare fades away and does not impose any competitive pressure on the MA plans. Without traditional Medicare in the mix, don’t be surprised when Medicare Advantage benefits and networks shrink significantly and enrollees’ costs rise.
Here’s more from Just Care:
- Corporate health insurers generate sizeable profits covering people with Medicare and Medicaid. Why?
- Data show Medicare Advantage covers less nursing, rehab, home health care
- Will the Biden administration rein in Medicare Advantage overpayments in 2025?
- UnitedHealth’s denials of critical rehab services is under investigation
- Justice Department going after Medicare Advantage fraud
Leave a Reply