AHIP Eyes 5.9 Percent MA Payment Cut, Market Disruptions

Christopher Cheney, for HealthLeaders Media , February 28, 2014

Glenn Giese, principal at Oliver Wyman and one of the authors of the commissioned report, said MA would take a "5.9 percent cut if this payment notice holds up." For beneficiaries, he said the payment cut would result in reductions of MA benefits or increases in MA out-of-pocket costs from $35 to $75. The dollar impact on beneficiaries from the 6 percent MA payment cut in the current year ranges from $30 to $70, according the study.

5-Star MA Plans Bonuses Would be Trimmed
The study includes a detailed accounting of the factors contributing to the projected 5.9 percent cut, with the prime factors as follows:

  • PPACA quartile impact: -2.4 percent
  • Reduction of bonuses in 5-star rating system: -1.9 percent
  • Ratebook change: -1.9 percent
  • Projected insurer fee: -0.8 percent
  • Risk score normalization factor: +3.2
  • Elimination of home assessment diagnoses: -2.0

Projected Effects on the Market
The study's authors conclude that the proposed payment cut poses a threat to the MA program, including a reversal of enrollment growth that has pushed the number of seniors in the program above 15 million.

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