On Feb. 21, Medicare delivered its annual "call letter" to Medicare Advantage plans announcing the terms for plans submitting bids for the 2015 season. The big change is that now that Medicare's Star's program no longer is a demonstration project, only plans with four stars or higher will get a bonus from the government. Advantage plans with a 2.5 star rating or lower for three years are going to be terminated.
With no bonus, plans with less than four stars might be severely effected to the point that members will see additional network and benefit cuts in the future. It is time to look at the star rating of the plan you are on if you have never checked this out.
Also included was the "announcement of methodological changes" in how payments to Medicare Advantage plans will be calculated. A major goal of the Affordable Care Act was to bring payments to Medicare Advantage plans in line with what was being paid out in dollars for original Medicare. The cuts have been phased in during the last four years. This announcement addressed the tweaks needed to bring Advantage payments in line and growing it at the same rate as original Medicare. In addition there will be a graduated excise tax on insurers that will add to costs in 2015. The total package of adjustments should average a little under 5 percent, according to Gorman Health Group, which advises plans about these changes. The good news is that by 2017 and beyond Medicare Advantage and Original Medicare should be growing at the same rate with minor adjustments vs. our current phase-in period.
When CMS makes these announcements it provides for a comment period that ends on the first Monday in April (April 7 this year). If you have concerns about these cuts be sure to contact your federal legislative representatives of your worries.
Betsy Vipond is CEO of The Senior Health Advisor and has been in insurance for more than 38 years. She is a board member of Tampa Bay Health Underwriters part of the National Association of Health Underwriters and specializes in Medicare products. Call her at (800) 603-0901.