Feb. 24—Medicare plans a 1.9 percent cut in 2015 for private plans that cover a growing share of its beneficiaries.

The planned cut, which is the latest in a series of Medicare Advantage cuts required to fund provisions of the Affordable Care Act (ACA), was announced by the Centers for Medicare & Medicaid Services (CMS) late on Feb. 21. It includes a 3.55 percent cut in the national per-capita Medicare Advantage growth percentage.

The cuts were described as one part of CMS’s effort to better align payments in Medicare Advantage with fee-for-service Medicare (Parts A and B) and to improve payment accuracy. The historically higher Medicare Advantage payments targeted by the ACA cuts will be paired with incentives for quality improvements by basing part of Medicare Advantage payment on plan quality performance.

In its announcement, CMS emphasized that the proposed cuts for 2015 are smaller than those implemented in 2014 and that those earlier cuts did not keep the program from exceeding a projected 5 percent enrollment increase. Nearly 30 percent of Medicare beneficiaries are enrolled in Medicare Advantage plans.

The announcement also came as the ratio of beneficiaries enrolled in higher quality plans—as denoted on the star ratings system—continues to increase. More than half of Medicare Advantage enrollees are now in plans with 4 or more stars, which is an increase from 37 percent of enrollees in such plans in 2013.

“We believe that plans will continue their strong participation in the Medicare Advantage program in 2015,” Jonathan Blum, CMS principal deputy administrator, said in a release.

Concerns Raised

But the cuts also drew serious concerns from insurers.

“Last year’s 6 percent cut to Medicare Advantage rates resulted in higher premiums, reduced benefits, fewer coverage options, and loss of provider choices for seniors,” Karen Ignani, president and CEO of America’s Health Insurance Plans, said in a release. “Another round of payment cuts would be devastating to the more than 15 million seniors and people with disabilities that have chosen to enroll in Medicare Advantage for the better benefits and higher quality coverage these plans provide.”

The latest CMS rules for Medicare Advantage plans include increased notification to enrollees regarding any changes to provider networks. CMS also indicated it is considering new requirements to limit such benefits changes to certain times during the year.

Other new Medicare Advantage provisions include a reduction in the maximum allowable increase in beneficiary costs from $34 to $32 per month.

The other future changes may target the growing use of preferred pharmacies. The CMS letter indicated the agency may ask Medicare Part D plans to increase the number of pharmacies offering preferred, or lower, cost sharing due to concerns that some plans that offer preferred cost sharing do not provide beneficiaries with sufficient access to the lower cost sharing at select network pharmacies. The proposed change aimed to ensure beneficiaries are not “misled” into enrolling in plans lacking “meaningful access to the advertised lower cost sharing,” according to the CMS announcement.

The agency will accept comments on the proposed advance notice and draft call letter until March 7. The final 2015 rate announcement and call letter will be published April 7.

Publication Date: Monday, February 24, 2014