Medicare Advantage Insurersโ Poised for $13โ Billion Boost Under New CMS Proposal
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Washington D.C. – A proposed ruleโค change by the Centersโ for Medicare &โฃ Medicaid Services (CMS) couldโข deliver a considerable financial โคwindfall, estimatedโ atโ $13 billion, to health insurers participating inโข the Medicare advantage program, according to a STAT analysis published November โค29, 2023.โค The proposal, finalized November 27, 2023, adjusts how CMS โcalculates risk scores – a key factor in determining insurer payments – perhaps leading to increased revenue for โthese companies.
This adjustment arrives as Medicare Advantage plans, covering over 30% of Medicare beneficiaries, โคface scrutiny over denialsโ of care and concerns about accurate risk assessment. While the overall โMedicare Advantage programโ is projectedโฃ to cost over $750 billion in 2028 according โขto CMS projections, this relatively smallโ changeโ in โคcalculation methodology โขrepresents meaningful additional funds for insurers seeking to improve theirโ profit margins within the โคprogram. The ruleโ is slated to take effect January 1, 2025.
How the Change Impacts Insurers
The CMSโ proposal centers on refining the methodology used โฃto account for county-level contract language
โ when calculating riskโข scores. Risk scores reflect theโค health status of a โplan’s enrollees, with โhigher scores triggering increased payments from the government. โขInsurers argue โฃthat โขcurrent methods underestimate the health risks of โtheir members, while CMS hasโ sought to ensure accurate and equitable payments. The โnew rule aims to address discrepancies โin how theseโค risk adjustments are applied across different geographic areas.
Did You Know? รขโฌยฆ
Medicare Advantage plans are offered by private companies approved by Medicare. Theyโข provide an option toโค Original Medicare,ofen including extra benefitsโ likeโ vision,dental,and โhearing coverage.
A Closer Look โคat the Numbers
Theโ $13 billion figureโฃ represents an estimatedโ increase in payments to Medicareโ Advantage โplans โขover the next decade.Whileโข seemingly a small fraction of the program’s overall cost, it โขtranslates โฃto substantial gains for individual insurers.The impact will vary โdepending on a โขplan’s enrollment andโ the health characteristics of its members. Industry analysts predict โขthat larger insurers with significant Medicare Advantage market share will benefit the most from the change.
| Year | Estimated Increase โค(Billions USD) |
|---|---|
| 2025 | $1.2 |
| 2026 | $2.1 |
| 2027 | $2.8 |
| 2028 | $3.1 |
| 2029 | $3.8 |
Concerns and โCriticisms
The proposed rule hasโข drawn criticismโข from some consumer advocates who fear it could incentivize โinsurers to enroll healthier beneficiaries, leaving sicker โindividuals in โคcustomary Medicare. They argue that the increased payments should be directed towards โฃimproving care quality and reducing barriers to access, rather than boosting insurer profits. We need to ensure that any changes to the risk adjustment system prioritize the needs of beneficiaries, not โคthe bottom line of insuranceโข companies,
stated a representative โfrom the medicare โขRights Center.
Pro tip: รขโฌยฆ
Toโฃ learn more aboutโข Medicare Advantage plans and find one that fits your needs, visit the official Medicare website at https://www.medicare.gov/.
Whatโ Happensโ Next?
The final rule was published onโฃ November 27,2023,and insurers are now preparing to implementโ the changes. CMS โwill continue to monitor the impact of the rule and make adjustments as needed. The agency is also exploring other potential reforms to the โMedicare Advantage program, including โmeasuresโค to address concernsโ about prior authorization and denial rates. theโข implementation of this rule will be closely watched by policymakers, insurers, and consumer โขadvocates alike.
What impact do you think this rule change will have on the quality of care for Medicare Advantage beneficiaries? And how should CMS balance the financial interests of insurers with the needs of the people they serve?
background on Medicare Advantage
Medicare Advantage (MA) plans have grown significantly in popularity since their inceptionโ in the 1990s. Originally designedโ as โฃa cost-saving alternative to traditional Medicare, MA plans now cover over half of all medicare beneficiaries in many parts of the country. These plans are offered by private insurance โขcompanies and are requiredโ to provide at least the โsame โlevel of coverage as Original Medicare. โฃThough, MA plans frequently enoughโค include โadditional benefits, such as dental,โค vision,โฃ and hearing care, as โwell as wellnessโ programs and other services. The growthโ of MA has been driven by factors such as increased competition among insurers,โ the availability of supplemental benefits, andโ the convenience of having all Medicare benefits in one plan.
Frequently Asked questions about the Medicare Advantage โขRule
- What is Medicare Advantage? Medicare Advantage plans areโค offered โคby private companies approved by Medicare,โ providing an alternative toโ Original Medicareโ with potential extra benefits.
- What are risk scores in Medicare Advantage? Risk โคscores reflect the health statusโ of a plan’s enrollees,influencing the paymentsโฃ insurersโ receiveโค from the government.
- How will this rule change affect Medicare โฃbeneficiaries? The rule change is not expected to directly impact beneficiaries’ coverage or benefits, but could influence the financial health โขof their plans.
- What is โCMS doing to address concerns about Medicare Advantage? CMS is exploring reformsโฃ to address prior authorization issues, denial rates, and ensure equitable payments to insurers.
- When does this new rule take effect? The rule isโ slatedโ to take effect Januaryโข 1, 2025.
