The Biden administration’s top health official accused insurers of spreading “disinformation” about a proposed change to reimbursement in Medicare Advantage, setting up a fight with companies that get $350 billion a year through the program.
(Bloomberg) — The Biden administration’s top health official accused insurers of spreading “disinformation” about a proposed change to reimbursement in Medicare Advantage, setting up a fight with companies that get $350 billion a year through the program.
The statement issued early Friday marks a newly aggressive tone from Health and Human Services Secretary Xavier Becerra after the administration proposed rate changes that it says would increase average payments to Medicare Advantage plans next year by 1%. Becerra’s comments followed a series of industry TV ads characterizing the rate update as a cut to the program for seniors who choose the private plans.
“Any claim that this Administration is cutting Medicare is categorically false,” Becerra said in a statement. “Leave it to deep-pocketed insurance companies and industry front groups to characterize this year’s increase in Medicare Advantage payments as a cut.”
Private Medicare Advantage plans now enroll about half of all people eligible for Medicare, and the program is a growing source of profits for big insurers like UnitedHealth Group Inc., Humana Inc. and CVS Health Corp. The debate over their reimbursement is colliding with a larger political fight over federal spending and the broader Medicare program that covers older and disabled people. In a campaign to get more favorable rates in the final version of the proposal, the industry lobby has cited President Joe Biden’s pledge not to cut Medicare.
The rate update proposed for 2024 was smaller than recent years’ updates. Stripping out the expected impact of how plans code for patient illnesses, the proposal amounts to a 2.27% rate cut. Part of the decrease is due to some plans’ lower performance on the government’s quality measures, which affects payments. The final rate is expected by early April.
In a briefing for reporters earlier this week, the Better Medicare Alliance industry group said the proposed rate changes could reduce benefits by about $540 per enrollee in 2024. That could mean Medicare Advantage plans would charge seniors higher prices or offer fewer extra benefits, like dental or vision care, the group said. That assumes insurers don’t change their bids for Medicare Advantage contracts, which they’re permitted to do.
Medicare Advantage insurers are facing rising questions about the costs of the program, and the Department of Justice has accused some insurers of improperly boosting payments, allegations the companies have disputed. Overseers at the Medicare Payment Advisory Commission, which counsels Congress, have urged changes for years, saying last year that a major overhaul is “urgently needed.”
The industry has marshaled congressional allies in both parties in defense of the program, and industry lobbyists regularly circulate letters of support signed by majorities of both houses of Congress. That’s helped insulate it from political conflict, but the tone of Becerra’s statement suggests more is brewing.
–With assistance from Alexander Ruoff and Tony Pugh.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.