CMS Offers Positive 2013 MA Outlook With Steady Premiums, Higher Enrollment

Stay ahead of developments in federal and state health care law, regulation and transactions with timely, expert news and analysis.

The Centers for Medicare & Medicaid Services said Sept. 19 that average Medicare Advantage premiums will remain steady in 2013 and that enrollment will climb.

Average monthly premiums for MA plans will increase by 4.7 percent, up from $31.12 in 2012 to $32.59 in 2013, CMS said. Enrollment is projected to grow 11 percent in 2013.

Despite the slight hike in next year's premiums, between 2011-2013, the average premium fell by 10 percent, Jonathan D. Blum, deputy administrator and director of CMS's Center for Medicare, said during a teleconference.

Over the same three-year period, he projected that the “number of beneficiaries choosing Part C” (Medicare managed care) would increase by 28 percent.

The teleconference was held in conjunction with CMS's release of spreadsheets on the results of CMS's negotiations with plans since bids were submitted in June. The information on individual plans includes monthly premiums, coverage in the so-called Part D (drug benefit) doughnut hole, and drug deductibles.

Plans may begin to market on Oct. 1 and beneficiaries may enroll in plans from Oct. 15 to Dec. 7.

Caution From Trade Association.

America's Health Insurance Plans, the major industry trade group, cautioned that, despite the “good news” about premiums and enrollment, “[w]e remain concerned that the benefits and coverage Medicare Advantage beneficiaries rely on today could be put at risk” as cuts under the Affordable Care Act are phased in, along with a new premium tax.

With a goal of placing payments to managed care plans on par with traditional Medicare, the health reform law established a new blended benchmark, which required CMS to rank counties from lowest to highest by average fee-for-service costs and divide them into four quartiles. The benchmarks, which are the maximum amount Medicare will pay per month for required benefits in an MA plan's benefit package, are multiplied by 95 percent, 107.5 percent, 100 percent, and 115 percent, depending on the level of Medicare spending.

“[G]iven the size and scope of these cuts, Medicare beneficiaries are likely to face higher costs and coverage disruptions in the coming years,” AHIP said.

Shortly after passage, the CMS Office of the Actuary said the law would reduce funding for MA by $145 billion over 10 years and enrollment by 50 percent once the cuts are fully phased in. The Congressional Budget Office estimated the 10-year reduction at $134.9 billion and that enrollment would be reduced to 9.1 million in 2019, rather than the 13.9 million that had been estimated without the new formula.

Asked about the enrollment estimations of CBO and the Office of the Actuary, Blum said that, although he respected the two offices, their predictions thus far have not proven true.

Competitive Market.

Blum credited increases in enrollment to a competitive marketplace and CMS's management of the program. He added that the average number of MA plans beneficiaries will have to choose from will increase from 26 to 28 in 2013.

Danielle R. Moon, director of CMS's Medicare Drug & Health Plan Contract Administration Group, said in a later briefing that in 2013, 1.3 percent of enrollees will lose their plans due to nonrenewals--424,000 in 2013, compared with 321,000 in 2012. This represents 3 percent of MA enrollees and 0.1 percent of enrollees in stand-alone plans, she said.

However, only 2,400 beneficiaries will lack access to an alternative, she said.

Quality ratings on CMS's one-to-five-star system will be posted on Oct. 11, Blum said.

Although he did not say whether the number of five-star plans would increase, Blum said there would be a “very positive change” in average scores.

By Mindy Yochelson  

More information is at

Request Health Care on Bloomberg Law