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Payments To Medicare Advantage Plans Will Increase In 2009

Armen Hareyan's picture

CMS on Monday announced that averagereimbursements to providers of private Medicare Advantage plans will increaseby 3.6% in 2009, the AP/Houston Chronicle reports. CMS, which increased average reimbursements to sponsors of MAplans by 3.5% last year, previously estimated an increase of 3.7% for nextyear.

The reimbursement rate will serve as a benchmark against which MA planproviders offer services, rather than a final payment rate. MA plan providersoften offer services for less than the benchmark because they can use a portionof the funds that remain to provide additional benefits, such as vision anddental care, to help increase enrollment. About 22% of Medicare beneficiariesare enrolled in MA plans. UnitedHealthGroup and Humana arethe largest providers of MA plans, with 14% and 13% shares of the market,respectively (AP/Houston Chronicle, 4/7).

In addition, CMS announced that the deductible for the Medicare prescriptiondrug plans will increase to $295 in 2009 from $275 this year and that theinitial coverage limit will increase to $2,700 from $2,510 (CQHealthBeat,4/7).

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Unions, Consumer GroupsSeek Reduction in MA Plan Reimbursements

In related news, AFL-CIO, AFSCME, Families USA and the Medicare Rights Center on Thursday sent a letter tolawmakers that requested a reduction in "excessive corporatesubsidies" for MA plan providers. Democrats in Congress since last yearhave sought to reduce reimbursements for MA plan providers, which receive 13%more in payments than the fee-for-service program for equivalent benefits. Analystssaid that such a reduction is unlikely, as President Bush has said that hewould veto any legislation that decreased reimbursements for MA plan providers(AP/Houston Chronicle, 4/7).

Forbes Examines Positions of PresidentialCandidates on MA

The current issue of Forbes examines how "one of the veryfew things" on which Democratic presidential candidates Sens. HillaryRodham Clinton (N.Y.) and Barack Obama (Ill.) and presumptive Republicanpresidential nominee Sen. John McCain (Ariz.) agree is that MA "has beenan expensive boondoggle" and "could face the scalpel of a newadministration in Washington." According to Forbes,privatization of Medicare "was once championed as a decent idea forcurbing health care inflation," but "opponents counter that the $95billion budgeted annually for private Medicare is $10 billion more thangovernment-run Medicare would spend." Legislation to reduce reimbursementsfor MA plan providers has failed in the past, but, "with a new president,that could change," according to Forbes (Whelan, Forbes,4/21).

Reprintedwith permission from kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, and sign upfor email delivery at kaisernetwork.org/email . The Kaiser Daily Health PolicyReport is published for kaisernetwork.org, a free service of The Henry J.Kaiser Family Foundation.