Medicare's privately run health plans got long-awaited news Friday on how much the federal government wants to cut their funding next year, and it wasn't good.
The rate changes affect nearly 16 million Medicare Advantage members and the insurers that provide them with coverage.
In a preliminary decision or "advance notice," the Centers for Medicare and Medicaid Services said funding to Medicare Advantage on a per-capita basis would be reduced 3.55% next year vs. this year. But that's just a starting point.
Counting other cuts, such as risk adjustment, coding intensity, taxes, ObamaCare-mandated rate cuts and expiration of the Star ratings demonstration, insurers could face funding reductions of 8%-10%, insurers and analysts say.
One analyst said, "It's really bad."
Insurers and analysts had expected cuts of 6% to 7%. CMS may make changes when final rates are released April 7.
UnitedHealth (UNH), the largest Medicare Advantage insurer, fell 2% in after-hours trading. The No. 2 Advantage provider, Humana (HUM), fell nearly 5%. No. 3 Aetna (AET) was little changed.
Seniors in Medicare Advantage plans "can ill afford yet another round of severe rate cuts," said UnitedHealth spokesman Matt Stearns. "Practical and predictable MA payment rates are essential to ensure the continued access to this successful program. We are reviewing the Advance Notice and will offer our comments to CMS at the appropriate time."
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Advantage plans have been reimbursed more per enrollee than those in the traditional Medicare fee-for-service program.
But the 2010 Affordable Care Act, or ObamaCare, aimed to level the funding playing field over time by reducing federal payments to Medicare Advantage, starting with a 2011 freeze...Read the full story HERE and view a related video below:
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