Strange Bedfellows Come to Medicare Advantage’s Rescue

If you can say anything about Medicare Advantage (MA), it definitely makes for strange bedfellows in both the private sector and in the halls of Congress.  Last Friday the full lobbying fury of the industry was in evidence as three separate groups of legislators appealed to the Centers for Medicare and Medicaid Services (CMS) on its 2014 rate proposal.

First was a bizarre, bipartisan collection of Representatives: Reps. Bill Cassidy and John Barrow and 93 other lawmakers — mostly GOP, but some Dems — begged CMS to reconsider its approach to the 2014 MA rates, saying CMS shouldn’t enact new risk adjustment policies and to assume that the 2014 Sustainable Growth Rate cuts will go into effect. “This reduction in funding will leave many vulnerable seniors with fewer benefits, higher out-of-pocket costs, and in some cases the loss of their current MA coverage,” they wrote.

Then, Senators Max Baucus (D-MT) and Orrin Hatch (R-UT), leaders of the Senate Finance Committee, fired their own salvo.  In a rare joint letter, they poked CMS for not giving MA plans enough notice on changes to the Star Rating calculation, and for assuming the SGR cuts would not be blocked, as they have every year for the last decade. This one change to CMS’s proposal would restore about 5% to MA payments in 2014. “The lack of transparency surrounding this proposal is troubling,” Baucus and Hatch wrote, asking CMS to delay changes until they can be vetted. Their voices are particularly important on the 2014 rates, as it is their panel that will handle the long-awaited confirmation of Marilyn Tavenner as CMS Administrator in the coming weeks.

Later that day a group of 22 other Senators sent a letter to CMS expressing their concerns about the 45-Day Notice.  Another strange bipartisan assortment including several influential Democrats urged CMS to assume that Congress will address the Sustainable Growth Rate.

We don’t have any doubt that CMS will walk back some of the draconian measures they included in the 45-Day Notice.  The agency has the most discretion around its proposed risk adjustment changes, and I suspect many of them won’t make it into the final rates on April 1.  And while the most meaningful remedy is for CMS to assume an SGR fix will be passed later this year, the agency has never taken such a step and we don’t expect they will here.

We believe an SGR fix will pass the Congress again, but not until later this fall and well after 2014 bids are due to CMS in June.  That means we’ll see a roughly 5% bump in MA rates in 2015 — but still very tough times for MA plans and their members next year.



Click here to read the MA rate letter Max Baucus and Orrin G. Hatch sent to CMS on March 15, 2013. 

To read the MA rate letter the US House of Representatives sent to CMS on March 15, 2013, click here.

Click here to review the MA rate letter the US Senate sent to CMS on March, 15 2013. 

Gorman Health Group Senior Vice President Bill MacBain explains the logic behind the proposed rate change, and shares a brief analysis of the impact in this regulatory summary.

Click here to review GHG’s comments in response to the Advance Rate Notice, submitted to CMS on March 1, 2013

Gorman Health Group Senior Vice President Jean LeMasurier summarizes the 2014 CMS Draft Call Letter.


1 Comment
  1. Thank you, John.

    I have been marketing and selling MAPD plans for over 20 years, in Arizona, TX., NM. NY NJ Tenn, GA. FLA.
    You are a true advocate for our MAPD insurance world. Hello to our friend Jeff Fox. Keep up the good work.
    Thanks again for keeping us infromed.
    Jane Wall

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