You can’t accuse President Obama of flip flopping on his position towards Medicare Advantage Plans. During the 2008 presidential election, he made his views about the Medicare Advantage program known and he delivered with his health care reform bill. Health care reform will affect Medicare Advantage ….. and not in a good way for the millions of Medicare beneficiaries who have come to enjoy the plan benefits.
The Centers for Medicare and Medicaid Services (CMS) predicted that enrollment in Medicare Advantage Plans will be cut in half as a result of the new Health Care Reform Bill. The report forecasts that because payments will be cut to insurance companies offering Medicare Advantage Plans, they will have no choice but to offer plans with less generous benefits.
Key changes of how health care reform will affect Medicare Advantage
- Beginning in 2012 how carriers are paid by CMS is slated to change. Counties will be divided into four categories based on population, with some rural counties receiving up to 115% of the traditional Medicare amount and more populous urban counties receiving as low as 95% of standard Medicare rates. Carries can choose in which Counties they can offer plans and these changes will require carries to be even more selective as to where plans will be offered.
- The star rating you see next to individual plans on the official Medicare website will become more important. Only one in four Medicare Advantage plans earns a four star rating. Four star plans will receive quality bonuses of up to 10% in certain markets. Plans that don’t rate as well may offer less than generous plan options.
- As in the under 65 year old health insurance market, carries will be required to operate at a minimum loss ratio of 85%. If claims are less than 85% of revenue, carries will be required to return the difference to CMS. This could potentially mean less profit which cannot be good news for a benefit rich plan.
- The Annual Election Period (AEP) will change in the Fall of 2011 to October 15th through December 7th for plans with a January 2012 effective date. The Open Enrollment Period (OEP) will become more restrictive and will only last 45 days and be limited only for those beneficiaries who want to leave a Medicare Advantage Plan and return to original Medicare and Part D. Like to like plan changes will no longer be allowed during the OEP.
Health Care Reform will affect Medicare Advantage Part D
The one bright spot in the Health Care Reform Bill is the closing of the Part D coverage gap to be gradually phased down from 100% to 25% by 2020. Beneficiaries who reach the coverage gap in 2010 will receive a $250 rebate.
Overall, it would seem that cuts in fees paid to carriers offering Medicare Advantage Plans along with mandatory loss ratios will result in less benefit rich plans being available.
Changes to the OEP will result in less freedom to make a change once you enroll in a plan. Health Care Reform will affect Medicare Advantage …. and not in a completely positive way.