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Life Health > Health Insurance > Medicare Planning

HHS, AHIP Clash Over Medicare Advantage

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WASHINGTON BUREAU — The Obama administration and Medicare Advantage writers are going head to head over looming 2011-contract-year cost increases.

Medicare Advantage program bids for 2011 were due Monday.

In a letter sent Friday to four Medicare Advantage carriers, U.S. Health and Human Services Secretary Kathleen Sebelius said that the new Affordable Care Act – the legislative package that includes the Patient Protection and Affordable Care Act and the Health Care and Reconciliation Act — gives it the authority to ensure that programs do not include excessive increases.

“The 2011 payment rates, plus the clarification of the Affordable Care Act of the secretary’s right to deny bids, should mean that Medicare Advantage plans offer the same level of choices at affordable cost-sharing and premiums next year that they do this year,” Sebelius writes in her letter.

The 2011 payment rates will be maintained at current levels, with cuts applying only to the 2012 contract year, Sebelius writes.

The scheduled 2012 cuts include $136 billion in direct cuts in Medicare Advantage funding over 10 years, along with what America’s Health Insurance Plans, Washington, estimates will be $70 billion in indirect cuts.

“I urge you, as you finalize your MA bids for 2011, to focus on competing on price and quality, rather than asking seniors who need healthcare the most to pay for it,” Sebelius writes.

The new ACA Medicare Advantage plan design review authority could “if necessary, extend to denying MA plan bids if they appear to include excessive increases,” Sebelius writes.

Sebelius sent her letter to the Blue Cross and Blue Shield Association, Chicago; WellPoint Inc., Indianapolis (NYSE:WLP); CIGNA Corp., Philadelphia (NYSE:CI); and Health Care Service Corp., Chicago.

It’s not clear whether Sebelius sent the letter to UnitedHealth Group Inc., Minnetonka, Minn. (NYSE:UNH), and Humana Inc., Louisville, Ky. (NYSE:HUM), the largest Medicare Advantage providers.

AHIP President Karen Ignagni sent a letter of her own to Sebelius.

Ignagni writes in her letter that the ACA Medicare Advantage cuts amount “to the largest funding reduction in the history of this program.”

“Medicare Advantage beneficiaries are likely to begin to feel the effects of these cuts starting next year,” Ignagni writes. “History has demonstrated that inadequate Medicare Advantage payments result in higher premiums and reduced benefits and choices for seniors.”


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