Insurers Predict Medicare Funding To Drop In 2016

By Christine Kern, contributing writer

CMS request for 1% cut leads to speculation about future Medicare payments.

Directly following a CMS announcement – reported on here by The Hill – that it planned to request a 1 percent reduction for Medicare Advantage, health insurers Humana and Aetna announced they anticipate their Medicare funding to drop during 2016 according to The Wall Street Journal. Medicare Advantage plans provide health benefits to more than 16 million elderly or disabled people.

The new rate proposal would decrease payments “modestly” by about 0.95 percent for 2016, said Sean Cavanaugh, deputy administrator and director of the CMS, which further predicted actual revenue for insurers would increase about 1.05 percent because of the growth rate in risk-coding scores would allow insurers to bill for more intense services.

If the CMS proposal goes through, Humana said it anticipates its Medicare Advantage funding to fall by 1.25 percent to 1.75 percent in 2016, while Aetna expects its funding to fall by 1 percent. On the other hand, UnitedHealth announced it anticipated increased revenue as a result of the proposal, according to a report on TheStreet.com.

Since major insurers like Humana, Aetna, and UnitedHealth Group are the biggest stakeholders in Medicare Advantage, they will undoubtedly weigh in heavily during the comment period for the proposal before the final rates are announced in April.

According to Reuters, America's Health Insurance Plans – the insurance industry's largest lobbyist – called for no cuts to payments, arguing that reductions would risk benefit cuts and higher costs for seniors. Additionally, an Aetna statement asserts reduced rates could cause some plans to exit certain geographic markets.