Seniors to Lose Some Benefits After Medicare Advantage Cuts

Two people walk inside a Medicare Services office. Despite the base payment reduction, Medicare Advantage plans are projected to receive a net payment increase of 3.7 percent, equivalent to $16 billion, once risk adjustments are applied.

Under the Biden administration’s latest adjustments, Medicare Advantage plans will see a slight base payment cut of 0.16 percent next year, igniting concerns over potential reductions in supplemental benefits for seniors.

Critics, including Florida Senator Rick Scott, argue that the decision could translate into tangible decreases in health care coverage for those reliant on these plans, with projected reductions amounting to $33 monthly or $396 annually per beneficiary.

“This Medicare Advantage benefits cut will result in the 2.8 million Florida seniors currently enrolled in Medicare Advantage, many of whom live on a fixed income, having their supplemental benefits reduced by $33 per month, or $396 per year,” reads a press release issued by Scott on Wednesday.

The change underlines the growing debate over the future of Medicare Advantage, a program that now enrolls over half of all Medicare recipients and has been scrutinized for its cost to taxpayers versus its benefit to enrollees.

“The takeaway from [President Joe] Biden’s actions is clear: Democrats don’t give a damn about the 2.8 MILLION Florida seniors enrolled in Medicare Advantage who will see costs go up by nearly $400 a year,” Scott said in the press release.

Newsweek has reached out to Scott for comment via email on Wednesday.

The decision to adjust Medicare Advantage payments comes from the Centers for Medicare and Medicaid Services’ (CMS) ongoing refinement of the risk adjustment coding system. Initiated last year, the refinements are set to ensure that payments to Medicare Advantage plans more accurately reflect the health status of enrollees.

Historically, Medicare Advantage plans receive compensation based on the documented health conditions of their enrollees, with more complex health profiles drawing higher payments for insurers.

The changes introduced by the Biden administration are designed to ensure a more prudent allocation of taxpayer funds.

Despite the base payment reduction, Medicare Advantage plans are projected to receive a net payment increase of 3.7 percent, equivalent to $16 billion, once risk adjustments are applied.

The broader context of the changes includes rising health care costs, influenced by increased demand for medical services as the population ages and the aftermath of the pandemic’s deferred care.

According to the CMS, the adjustments are aimed at enhancing health equity, providing more person-centered care, and ensuring the program’s sustainability.

Another key change is an update to the payment calculation models, including a decision to set the Effective Growth Rate at 2.33 percent. This rate takes into account the cost growth of Medicare Fee-For-Service and incorporates a 52 percent adjustment for medical education costs.

As the industry adjusts, the ultimate impact on Medicare Advantage beneficiaries will hinge on how well insurers adapt to the adjustments while maintaining the quality and scope of coverage.

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