Lawmakers and stakeholders are still very upset with the U.S. Department of Health and Human Services’ (HHS) plan to cut payments to the Medicare Advantage (MA) program and to enforce regulations against MA plans that have benefitted financially from improper overpayments. This week, HHS Secretary Xavier Becerra defended the rule in two separate Senate committees.
While the advanced notice doesn’t outright cut payments to the program and instead raises them 1%, third party analysis shows that after factoring in changes to quality bonuses and close monitoring of the MA risk adjustment model could impact MA plans’ bottom lines by more than 2%. According to Fierce Healthcare, providers are concerned as well after the Centers for Medicare and Medicaid Services (CMS) announced it would remove 2,000 diagnostic codes from the risk adjustment model to curb issues with upcoding.
Plans and MA advocates have raised alarms that any type of cut to pay by the Medicare program could throw the entire MA business model into jeopardy, singling out supplemental benefits for the chopping block. Earlier in the month, a group of Republican Senators sent a letter to the Secretary and CMS Administrator Chiquita Brooks-LaSure cautioning the agency against any regulations that didn’t “maintain program stability, protect beneficiaries from potential disruptions, mitigate unfavorable impacts for seniors.” Inside Health Policy reports that in the Senate Finance Committee and Senate Appropriations committee, Becerra countered accusations that his department was compromising senior care by noting that such cuts are the decision of the insurer, not the regulator:
The benefits that Medicare calls for in the law are not changed, are not diminished and therefore should not be cut. If they’re cut, it’s not because the federal government has asked for them to be cut, it’s because the provider has decided to make cuts in certain areas.
They’re not allowed to make cuts to Medicare benefits. They may change the package of benefits they provide within a particular plan and may change out certain benefits, but they’re not allowed under law to cut Medicare benefits from any beneficiary. And if they tell you they are going to have to, then I say to you right out front: that’s an unequivocal untruth.
In an interview with Modern Healthcare on Monday, Becerra only thinly veiled his ire for predatory businesses that target Medicare and his commitment to keeping the Medicare program solvent:
We have to continue to work on the Medicare program because the president wants to keep it strong for the next generation. We constantly are working on regulations that will help make sure that we place every dollar that a taxpayer has paid through their FICA deductions to their paycheck, as much of that as possible, goes to actually provide care once they are in the Medicare program versus than just let middlemen skim money off the top and make a profit.
And it’s no wonder that the Secretary and the Biden administration on the whole are getting pummeled by accusations that they’re causing cuts to supplemental benefits and MA plans, from both sides of the aisle in Congress — though notably not from leadership — to advertisements in the Super Bowl. The New York Times reports that MA insurers are “pouring buckets of money” into fighting the proposed rules and rates.
In late February, the Kaiser Family Foundation published findings in a study that determined Medicare Advantage insurers report far higher gross margins per enrollee than any other type of health insurer. In 2021, MA insurers reported gross margins nearly $1,000 higher than the individual market and Medicaid managed care market.
2023 Kaiser Family Foundation. “Medicare Advantage Insurers Report Much Higher Gross Margins Per Enrollee Than Insurers in Other Markets.”
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