2015 Cuts for Medicare Advantage Smaller Than Expected

February 21, 2014

Private Medicare Advantage plans — the managed-care version of fee-for-service Medicare — would receive less federal funding in 2015 than they did in 2014 under a proposal released by the government today, although the cut is not as steep as health insurers had feared.

Physicians are paying attention to the proposed funding level, to be set in stone in April, because they could find themselves ejected from Medicare Advantage provider networks — and possibly separated from their patients — if insurers continue to trim costs in response to government cuts. One way is winnowing out supposedly high-cost providers.

The Centers for Medicare & Medicaid Services (CMS) today released a proposal for Medicare Advantage next year estimating that payments to these plans will decrease by 1.9%. This reflects the combined effect of growth in fee-for-service spending and what CMS calls the Medicare Advantage growth percentage, which is put at negative 3.55%, according to CMS.

Health insurers had been expecting more like a 6% cut to Medicare Advantage plans next year. The Obama administration has been under intense political pressure not to pinch pennies with this popular Medicare program.

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