The CMS (Centers for Medicare and Medicaid Services) has proposed, in its latest Medicare Advantage rate notice, to waive the bidding need for employers and union groups that give retirement plans to their workers.
CMS rather needs to develop set payment amounts, showing the bid procedure lacks competition, and therefore, price incentives.
Medicare Advantage policies that exclusively serve employer and union teams do not compete in the open market, but are given through negotiated arrangements, CMS stated.
The change is hoped to cut into profits for these policies, as the bids are normally greater than those in the individual market.
“We consider there is an incentive for EGWPs (Employer Group Waiver Plans) to bid as close as possible to the benchmark in case to maximize revenue for the policy,” CMS claimed.
The shift has also been suggested by the Medicare Payment Advisory Commission, which discovered average bids for non-employer policies at 86% of their benchmark, while employer union policies averaged 95%.
In the year 2015, MedPAC discovered that the average bid for the employer/union policies was 105% of the fee-for-service rate, whereas the average bid for all Medicare Advantage policies was 94% of the fee-for-service rate, CMS stated.
MedPAC claimed in a March 2009 Report to Congress, “The closer the bid is to the benchmark the better it is for the policies and employer, because a greater bid brings in more revenue from Medicare, possibly offsetting expenditures that would have needed a greater pay-in from employers,” CMS stated.
Bids for the employer and union policies should be lower than individual policies because the threat scores are lower for the healthier population, and there is less administrative price regarded to enrollment and marketing, CMS claimed.
CMS stated that it considers that waiving the need to submit the bids for their Medicare eligible retirees will ignore the price and administrative burden of submitting complicated bids.
As of the year 2015, about 3 million beneficiaries, or nearly 19% of entire Medicare Advantage beneficiaries, were enrolled in an employer/union policy, stated CMS, which 1st depicted concern for the bid procedure in the year 2012.
“(These) bids are greater with no apparent rationale or explanation for the higher prices,” CMS stated.
CMS cautioned that these polices must sustain to meet the needs, saying it identified that decreased payments could lead to greater premiums for present levels of supplemental coverage or that employers would select to decrease the supplemental coverage given to workers.
America’s Health Insurance Plans has been lobbying against the latest payment plans, claiming that it needs to secure coverage for 17 million Medicare Advantage beneficiaries. 1 implied risk is of 3 million Medicare Advantage enrollees losing coverage through their employers and unions.
Ahead of the final principle of the Medicare Advantage payments on the day of April 4, a grassroots Coalition for Medicare Choices has been boosting the senior citizens to man phone banks, attend in-district Congressional meetings, and lead voter registration tasks, AHIP stated. There will be TV advertisements, calls to congressional offices, and visits with appointed representatives during the week of the day March 21, it claimed.
Seniors will observe the affect of latest payment changes in late October 2016, when they start enrolling in their 2017 Medicare Advantage coverage, AHIP claimed.
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