Medicare Advantage mayhem this fall?

Are big changes coming to Medicare Advantage? For an answer to that question we’ll have to wait until this fall when the details of 2014 Medicare Advantage plans are announced.  But a perfect storm of required payment cuts to Advantage plans and a new report of past overpayments to the insurance companies that run them is a little scary.

Over 12 million people are enrolled in Medicare Advantage plans around the country. In Arizona, around 45% of Medicare beneficiaries in Maricopa, Pinal, and Pima counties are enrolled in Advantage plans.  In Arizona, most Advantage plans have no monthly premium, making them very attractive to cost-conscious seniors.  Financial issues could put an end to these zero-premium Medicare Advantage plans.

According to an article at Bloomberg.com, Medicare Advantage plans were paid about $135 billion in 2012. For 2014, those payments are supposed to be cut by around $11 billion.  Executives at insurance companies running Medicare Advantage plans are warning that big changes will have to be made if these cuts go into effect.

And then there is a recent report by the Government Accounting Office (GAO) saying that Medicare Advantage plans were overpaid by as much as 5.1 billion dollars over the last three years. And, I suppose, Medicare will want that money back.

According to the Bloomberg.com article:

The overpayments happened because Medicare Advantage plans claimed that their patients were sicker on average than those in the traditional fee-for-service program, the GAO said in its report. Medicare didn’t adjust its payments to the plans to sufficiently account for what the GAO called “differences in diagnostic coding” by the insurers.

What all this means for the 12 million people enrolled in Medicare Advantage plans is unclear. But the answer will arrive in the mail later this year.  You see, at the end of September, Medicare Advantage companies must send their Annual Notice of Change (ANOC) to everyone enrolled in their plans. This ANOC will tell people how much or how little their plan will change for 2014.

Will some or all of the Medicare Advantage plans in Arizona have premiums for 2014? What if one company holds onto their $0 premium plan while others have premiums?  Will thousands of Arizonans change to the $0 premium plan? Will everybody be shopping for a new plan this fall?

Yikes! The next Medicare Open Enrollment Period (October 15 – December 7) could be a wild one. But we’ll just have to wait until September to know for sure.

 

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