MA plans get a little financial help from HHS

April 21, 2011

Provisions in the health care law call for reductions to the 14% supplemental payments to Medicare Advantage plans that start in 2012, reducing payments by $145 billion over 10 years. This reduction was widely called “cuts to Medicare” by those opposed to reform – and subsequently caused many seniors to worry about reduced services, increased out-of-pocket costs, and being driven out of Medicare Advantage plans back to original Medicare. Recent moves by the HHS to provide incentives for improved quality to a broader range of plans may alleviate some of these worries.

In an effort to provide incentives for Medicare Advantage carriers to improve quality, the law was originally going to provide bonuses for plans that received four to five star quality ratings on the government’s grading system. This would have left something like 80% of Medicare Advantage enrollees in plans that were not eligible for bonuses, and, presumably, more susceptible to cuts in services and or cost increases.

HHS has just announced that it will also give bonuses to plans that receive three or three-and-a-half stars, but at a lower percentage. This change means that four out of five enrollees will now be in plans that are eligible to receive bonuses. This $6.7 billion infusion of funds should postpone any drastic reductions in service and higher costs.  The AP published a helpful and informative piece explaining the change, which you can read here.

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