Medicare Advantage insurers received welcome news last week when the CMS said it will boost payment rates for 2016 by the highest amount since the Affordable Care Act was enacted. Insurers have complained bitterly about the yearly rate uncertainty, but Advantage enrollment has grown by about 8% annually since 2010. What gives?
It's a combination of affordable premiums and an attractive package of benefits, including vision, dental and prescription coverage, experts say. More beneficiaries are switching from traditional Medicare to save money.
The CMS said last week that the average benchmark rates paid to Advantage plans in 2016 will go up by 1.25%.
Rates will rise by 3.25% on average when factoring in how plans code health-risk scores for their members. That's compared with a 0.95% cut in benchmark rates the CMS proposed in February.
Karen Ignagni, CEO of America's Health Insurance Plans, demanded after February's proposed cuts that the CMS “protect seniors from facing higher costs and fewer benefits by not cutting Medicare Advantage payments”—hinting that insurers would pare back plan offerings, cut benefits and raise premiums.
But data suggest those threats over the past few years have been overstated. Insurers have not significantly altered plan designs. But they have raised out-of-pocket maximums.
For example, 97% of Advantage plans offered vision, dental or hearing benefits in 2014, the same percentage as 2013, according to research firm HealthPocket. More than 90% of Advantage members also have access to a plan with no monthly premium. And the average Advantage premium for 2015 across all plan types is $62.69, only 2% higher than the average premium in 2014, according to HealthPocket.