Blue Cross Official: Medicare Advantage Cuts Will Increase Premiums, Force Millions Out of Program

Les Masterson, for HealthLeaders Media , March 24, 2009

Proposed Medicare Advantage cuts and subsequent premium increases could force millions of seniors into traditional Medicare plans without care coordination and would shift more costs onto beneficiaries, according to a Blue Cross Blue Shield Association official.

Alissa Fox, senior vice president in the office of policy and representation at BCBSA, which covers 1.6 million Medicare Advantage enrollees in 42 states, the District of Columbia, and Puerto Rico, said the Obama administration's proposed 5% Medicare Advantage payment cuts to private insurers could increase beneficiary premiums by $50-$80 per month, which will force many, particularly low-income seniors, into traditional Medicare without supplemental coverage. That $50-$80 premium increase would happen if insurers passed the full payment cuts onto members, although they could also combine a smaller premium increase with service reductions, said Fox during a Monday press conference.

The Obama administration and Democrats have criticized the Republican-backed Medicare Advantage programs because they cost 14% more on average to care for than Medicare fee-for-service beneficiaries.

However, Medicare Advantage supporters, including Fox, said a benefit to Medicare Advantage is that it coordinates care for 10 million beneficiaries, which is especially important for seniors with multiple chronic illnesses, who take multiple medications and visit various doctors. That coordination of care is not present in traditional Medicare because it doesn't pay doctors for care coordination, Fox said.

Rather than across-the-board Medicare Advantage cuts, Fox said CMS should review how it pays for services, improve quality through pay-for-performance programs, and target insurers that are upcoding as a way to make more money.

"We think that there are ways to reform the program. We think it should be made more efficient. We think it should be rewarded for demonstration quality," said Fox. CMS must finalize rates by April 6, and BCBSA has already sent its comments regarding Medicare Advantage payments cuts to the federal government, said Fox.

However, beyond the 2010 payment cuts, Fox said she is also concerned about future hits to Medicare Advantage. For instance, as part of his proposed 2010 $3.1 trillion budget, President Barack Obama proposed that one-third of a $634 billion healthcare reform fund come via Medicare Advantage cuts.

"When you look at this, you need to really look at what it does to Medicare beneficiaries, and you need to make sure that the premiums are stable and predictable," said Fox.

Les Masterson is senior editor of Health Plan Insider. He can be reached at

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