The Obama administration reversed itself Monday, scrapping plans to cut by 2.2 percent the rates paid to health insurers that take part in the Medicare Advantage program.
The insurance industry and more than 100 members of Congress had objected to the cut in the per capita growth rate, which was proposed in February. They argued that the administration was using faulty methodology. The insurers mounted a vigorous campaign, using television ads and phone banks, to persuade lawmakers to oppose the reduction.
On Monday, the Centers for Medicare and Medicaid Services (CMS) announced that it was changing its method of calculating reimbursement rates. Instead of cutting payments for Medicare Advantage plans, it will increase them by 3.3 percent.
“The policies announced today further the agency’s goal of improving payment accuracy in all our programs, while at the same time ensuring program stability and preserving beneficiary choice,” Jonathan Blum, the CMS’s acting principal deputy administrator, said in a statement.
Twenty-seven percent of Medicare beneficiaries — about 13 million people — get their benefits through the private health insurers that make up the Medicare Advantage program, according to the nonpartisan Kaiser Family Foundation.
The cut would have been one of several directed at the Medicare Advantage program. The plans still face payment reductions and a new tax under the 2010 health-care law.
“Today, CMS rightly acted to reverse course and implement a responsible rate that will preserve choices and ensure continued access to top-notch quality and affordable care for beneficiaries enrolled in the popular Medicare Advantage program,” Sen. Orrin G. Hatch (R-Utah) said in a statement.
In a statement, Karen Ignagni, president of America’s Health Insurance Plans, the industry’s main trade group, praised the administration for being “responsive to the more than 160 members of Congress from both parties who raised concerns about the impact of the proposed payment rate on seniors.”
She added, “CMS has taken an important step to help stabilize Medicare Advantage at a time when the program is facing significant challenges.”