Posted by Curt on 21 February, 2014 at 8:31 pm. 10 comments already!

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Forbes:

Get ready for more cuts to private Medicare plans, and more fired doctors, as insurers are forced to cheapen provider networks, and benefits.

That’s the upshot from the announcement by the Centers for Medicare and Medicaid Services that 2015 Medicare Advantage rates will be cut a whopping 8%, once new reductions get baked into the program’s baseline.

Some of the best analysis of the new rate adjustments comes courtesy of managed care analysts at Credit Suisse. In a report tonight, they cobble together the different adjustments to arrive at the 8% figure. With this being an election year, and 15 million seniors (about 29% of all Medicare beneficiaries) getting their care from the program, there’s a chance that some of these cuts will get reduced. The Obama Administration has until April 7thto publish the final numbers.

The total reduction is the sum of a dozen different adjustments. Some stem from statutory variations that are made to the program based on broader fiscal trends in healthcare. Other cuts are a direct result of Obamacare.

One of those Obamacare cuts is a 2% reduction to the rates that CMS pays to the Medicare Advantage plans for each beneficiary they enroll.

Previously, these health plans were paid a premium on the amount of money that each beneficiary is estimated to cost under Medicare’s fee for service program. Under Obamacare, the Medicare Advantage plans are brought into parity with FFS Medicare.

The Obama Administration funneled money to the MA plans during 2012 to offset these reductions ahead of the Presidential election. With the election out of the way, these cuts are finally coming due.

Another piece of the 8% reduction comes from the fee Obamacare imposes on health plans. Starting in 2015, health plans are required to pay an $8 billion (non-tax deductible) fee that will be apportioned to the different insurers based on their share of the total risk-based premiums that the industry collects. This fee accounts for another .6% of the projected 8% cut.

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