Medicare Advantage retiree plans have about 3.3 million enrollees.

Medicare program managers have proposed a 2017 payment-setting strategy that could hurt employers’ Medicare Advantage-based retiree health plans, according to business and labor groups.

See also: Medicare plans may face wave of network adequacy fines

In a report prepared for the U.S. Chamber of Commerce, Milliman analysts estimate that the funding process change could cut Medicare Advantage program funding for the retiree health plans, or employer group waiver plans (EGWPs), about 2.5 percent to 2.8 percent.

The funding cuts could increase the cost of the retiree plan coverage about $19 to $22 per enrollee per month, according to the Milliman analysts.

The plans cover about 3.3 million people.

The Medicare Advantage program gives private insurers a chance to use Medicare funding to sell plans that serve as an alternative to traditional Medicare coverage. The program has been using separate bidding processes to determine how much Medicare pays to both individual Medicare Advantage policy issuers and EGWP sponsors.

This year, the Milliman analysts say, the Centers for Medicare & Medicaid Services (CMS) says it wants to eliminate the EGWP bidding process and base EGWP funding on the results from the individual market bids.

Because Medicare has been paying more for the EGWP enrollees than for the individual market enrollees, eliminating the EGWP bidding process seems likely to cut EGWP support, analysts say.

The U.S. Chamber and other organizations have formed a Coalition to Save Medicare Advantage Retiree Coverage to oppose the change. Coalition members include Aetna Inc. (NYSE:AET); Humana Inc. (NYSE:HUM); MetLife Inc. (NYSE:MET); and UnitedHealth Group Inc. (NYSE:UNH).

The coalition also includes a number of trade groups, such as the American Benefits Council. At this point, America’s Health Insurance Plans (AHIP) is not a member.

See also: 

How Medicare Advantage might change

Insurers win Medicare Advantage battle

  

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