Each year, the Centers for Medicare and Medicaid Services (CMS) proposes the payment rate for insurers offering Medicare Advantage plans for the following year. Right now, payments to Medicare Advantage plans are projected to be $88 billion more than they should be, driving up Medicare premiums and threatening Medicare’s long-term sustainability. Will the Biden administration rein in Medicare Advantage payments?
Excessive Medicare Advantage payments take a dangerous toll on the Medicare Trust Fund, rapidly eating into it and threatening its solvency. Moreover, excessive Medicare Advantage payments drive up people’s Medicare premiums. According to the Committee for a Responsible Federal Budget, people with Medicare will spend $260 billion more in Medicare premiums in the ten years between 2023 and 2033 than they would have if CMS stopped overpaying Medicare Advantage plans.
In addition, Medicare Advantage overpayments are likely to lead to the death of traditional Medicare, the government administered alternative to Medicare Advantage. The overpayments enable the insurers offering Medicare Advantage to lure people away from Traditional Medicare through offers of dental and hearing benefits.
Last week, CMS proposed a continuation of its Medicare Advantage rate proposal from last year, which would result in about a 0.2 percent decrease in Medicare Advantage payments for 2025. CMS says it will also result in a 2.45 percent reduction in revenue.
Overall, for other reasons, their revenue will increase about 3.7 percent. CMS is changing the way it determines whether it will pay more for enrollees who have a variety of different health conditions.
The insurers, of course, are already starting to say that the proposed rate will hurt their bottom line. But, it should not affect people’s Medicare Advantage benefits because the MA plans will still be overpaid tens of billions of dollars.
Here’s more from Just Care:
- What does the MedPAC chair really think about Medicare Advantage?
- Medicare Advantage needs serious fixes; $88 billion in government overpayments must end
- Five things to think about when choosing between traditional Medicare and a Medicare Advantage plan
- Sen. Warren and Rep. Jayapal urge CMS to end Medicare Advantage overpayments, punish bad actors
- Ten ways to improve Medicare Advantage
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