Revenue Cycle Management Blog | GroupOne Health Source

CMS U-turn on Medicare Advantage Payment Cuts

Written by Kaitlyn Houseman | April 4, 2013

Medicare Advantage Payments to be Increased Instead of Cut

Medicare Advantage customers need not fear the painful benefit cuts in 2014 as anticipated by Health Insurers. CMS backtracked on plans to cut Medicare Advantage payments to insurers by 2.2% in 2014 and instead decided on a 3.3% increase. 

Late Monday it was announced that health insurers stand to get considerably more money for running the Medicare Advantage plans in 2014 than they had feared.  A mid-February proposal featured a 2.2% cut and prompted health insurers to take action.  The lobbying push from health insurers gained support in Congress where at least 160 law makers signed letters to regulators.  The health insurers’ trade group released a report conducted by consulting firm Oliver Wyman revealing the potential impact of the 2.2% cut.  This report points out it is likely that with the cut, an average Medicare Advantage beneficiary would see an increase in their premiums from $50 to $90.

CMS issued the 2014 rate announcement and final call letter for Medicare Advantage (MA) and prescriptions drug benefit (Part D) programs on Monday, April 1.  Key changes and updates finalized include

  • Lower Out-of-Pocket Drug Spending
  • Greater Protections for Beneficiaries
  • Payments to Plans
  • Improved Risk Adjustment Model

Jonathan Blum, CMS acting principal deputy administrator, was quoted as saying, “The policies announced today further the agency’s goal of improving payment accuracy in all our programs, while at the same time ensuring program stability and preserving beneficiary choice.”

The Rate Announcement and final Call Letter may be viewed using the following link:, click on Announcements and Documents for access to the 2014 files.