CMS Proposal for Medicare Advantage Plans Reduced Payments in 2015

On Friday the Centers for Medicare and Medicaid Services (CMS) proposed a 3.55% reduction in Medicare Advantage reimbursement rates for 2015.

Medicare Advantage, also know as, Medicare Part C, is the privatization of Medicare plans, which a large number of Medicare Beneficiaries use. There are Medicare Advantage Plans in many areas, and the plans available depend on the county of residence.

This will likely affect many seniors that are currently in Medicare Advantage Plans today, as well as options for people turning 65 in 2015. The Insurance Companies that offer these plans lost some money in 2014 with the new premium tax that was part of the ACA, so this will farther cut into profits for them. For the most part, for the Medicare Advantage plans that I represent, the 2014 costs were absorbed by the Medicare Insurance companies.

With the reduced payments for Medicare Advantage Plans, I would expect that some Medicare Advantage Plans will pass on the lost revenue by increasing Medicare Advantage Plan beneficiaries co-pays, deductibles and Maximum Out of Pocket expenses. In some more dramatic situations, they might leave service areas that they are having trouble making money in.

This is not good new for Medicare Beneficiaries, but it may unfortunately be somewhat expected. With the United States debt growing by the minute, I would guess that this is not the last belt tightening that we shall see for Medicare Plans.

This reduction in reimbursement rates is just that, a proposal. It is not finalized, yet. I would imagine that many Insurance Companies are getting ready to wage quite an argument in Washington to make this go away.

My question would be if they can make 2015 reduction free, what will happen in 2016? Well that is the reason I always talk to my clients about Original Fee for Service Medicare and how Medicare Supplements work. If Medicare Advantage does continue to get reduced funding, Medicare Supplement Plan N and Plan F start to look much more attractive.

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