February 27, 2023

Steps to Hold Medicare Advantage Accountable are Not Cuts, Experts Say

Two announcements by the Centers for Medicare and Medicaid Services (CMS) related to Medicare Advantage — an alternative to original Medicare, primarily run by major insurance companies — have brought additional discussion about Medicare cuts.

Insurance companies that sponsor Medicare Advantage have starting running ads, claiming that the Biden Administration is “cutting Medicare Advantage.” However, according to the nonpartisan Kaiser Family Foundation, those claims are baseless, and there is no clear evidence to suggest that the Administration’s Medicare Advantage payment changes will lead to premium increases or cuts in benefits for Medicare beneficiaries.

One of the announcements by CMS is a rule change, set to take effect April 3, that’s intended to increase the government’s ability to audit Medicare Advantage plans and recover past overpayments.

The other is an annual update that would modify Medicare Advantage’s risk adjustment model, which determines how much the government pays insurers for beneficiaries’ reported health conditions.

Current efforts to improve the accuracy of payments made by the federal government, and improve program integrity, are unlikely to have a major impact on the program, the insurance industry or beneficiaries, given relatively generous payments to plans.

In addition, any reductions in rates paid to insurers are projected to be offset by other changes that are expected to yield a 1% increase in payments to insurers per person in 2024.

“The industry is running misleading ads to scare the American public,” said Robert Roach, Jr., President of the Alliance. “Politifact has found the ads to be a false claim, and the Kaiser Family Foundation has also found it to be untrue. It is critical to hold Medicare Advantage plans accountable so taxpayers and beneficiaries are not taken advantage of.”