Insurers: Medicare Advantage cuts cost seniors $900 per year

The health insurance industry fighting proposed cuts to Medicare Advantage payments argued they will raise seniors’ out-of-pocket costs next year.

America’s Health Insurance Plans (AHIP), a trade group, blasted the reductions with a report Thursday finding that beneficiaries could pay as much as $900 more in 2015 if the cuts take effect.

{mosads}The report by consulting firm Oliver Wyman concluded that Medicare Advantage (MA) plans could see a 5.9 percent total cut to their payments next year as a result of changes proposed by federal health officials.

The Centers for Medicare and Medicaid Services (CMS) floated a 2015 cut of roughly 2 percent on Friday. The number was less than many insurers expected, causing major gains for several insurance stocks this week.

Still, AHIP President Karen Ignagni said the CMS is putting seniors’ well-being on the line.

“Many seniors have experienced fewer benefits and higher out-of-pocket cuts as a result of last year’s cuts,” she told reporters on a call. “What we’re focused on is the impact on beneficiaries.”

Moody’s Investor Service also said Thursday that next year’s proposed rates represent a credit-negative for insurers.

There is widespread disagreement about the value of cutting payments to Medicare Advantage, an increasingly popular alternative to traditional Medicare that covers roughly one-third of the program’s beneficiaries.

MA plans receive more government funding per patient on average, thanks to GOP-backed policies that benefited insurance companies.

Democrats have traditionally sought to rectify this imbalance through cuts, arguing that “overpayments” in private Medicare encourage waste.

The Affordable Care Act followed this logic by cutting funding to the program by $200 billion over 10 years.

AHIP has consistently opposed those reductions and the additional, discretionary cuts enforced on an annual basis by the CMS.

The group said it will pull out all the stops next month to discourage federal health officials from following through on their rate proposal. Final rules are due out April 1.

“There isn’t a lot of time,” Ignagni said.

“It’s very important to be actively engaged with the agency, with members of Congress, with leaders in the different stakeholder communities. … We’re going to be very, very actively engaged on all of those fronts.”