* Administration official ties MA plan success to quality
* Republican lawmakers complain to administration
* MA payments down from 114 to 104 pct of fee-for-service
By David Morgan
WASHINGTON, Feb 28 Medicare Advantage insurance
plans that meet the program's higher quality standards should be
in a strong position to withstand federal payment reductions
proposed for 2014, a senior U.S. health official said on
Jonathan Blum, acting principal deputy administrator for the
Centers for Medicare and Medicaid Services (CMS), told the
Senate Finance Committee that insurance plans with four-star and
five-star Medicare quality ratings have seen enrollment more
than double in recent years, despite a huge drop in federal
Medicare's rating system ties federal payments to Medicare
Advantage insurers to a series of quality performance standards
and includes bonuses for plans with top rankings.
"Those plans who are below four-star are facing, given what
we've proposed, the greatest payment challenge. But I believe
that plans that have made the transformation to provide four-
star/five-star care will have a strong business model," Blum
said in testimony before the panel.
CMS, a federal agency within the Department of Health and
Human Services, has proposed a 2014 payment reduction of 2.3
percent for insurers in Medicare Advantage, a program that
allows about 14 million elderly and disabled people to receive
their Medicare coverage through private health plans.
But the proposal, due to be finalized on April 1, has come
under intensive fire from the insurance industry, which warns
the change would cost insurers $11 billion and could lead to
higher costs for beneficiaries.
America's Health Insurance Plans, a leading trade group,
issued an infographic on Thursday that suggested lower Medicare
Advantage payments combined with other changes under President
Barack Obama's healthcare reform law could increase average
premiums or reduce benefits by $50 to $90 a month.
Separately, three Republican lawmakers led by Senator Orrin
Hatch charged in a letter to CMS that cumulative changes to
Medicare Advantage would cut more than $300 billion from the
program and jeopardize its growth. The sum is part of the $716
billion in lower Medicare payment increases achieved through the
healthcare law, which Republicans characterized as payment cuts
during the 2012 presidential campaign.
But some Democrats offered a different reaction to the CMS
payment proposal for 2014.
"The insurance companies are screaming bloody murder. But
shouldn't they have known?" asked Senator Bill Nelson, a Florida
Democrat, who said the Patient Protection and Affordable Care
Act has long aimed to reduce payments to insurers.
When Medicare Advantage was created in 2003, Congress
included incentive payments to ensure plan participation. On
average, Medicare paid private plans 114 percent more than the
cost of traditional fee-for-service Medicare before healthcare
reform became law in 2010.
Blum said the reform law has reduced that payment rate to
104 percent of traditional Medicare for 2013.
Insurers say Medicare Advantage plans offer more benefits
such as prevention programs or reimbursement of gym memberships
that traditional Medicare plans do not.
Medicare currently offers bonus payments to private plans
that maintain higher quality ratings and Blum told lawmakers
that 37 percent of Medicare Advantage beneficiaries are now
enrolled in four- and five-star plans, up from 16 percent in
recent years. CMS says beneficiary premiums have fallen 10
percent since the reform law's enactment.
"Our goal is that every Medicare beneficiary who chooses the
(Medicare Advantage) program has an opportunity and seeks out a
four- or five-star plan," he said.
"Some plans haven't yet made the transformation to four
star, five star," Blum added. "We want to help those plans."
(Reporting by David Morgan.; Additional reporting by Caroline
Humer. Editing by Andre Grenon)