The CMS will reduce some payments to Medicare Advantage insurers by about $4 billion over the next five years, following a "technical correction" in the health-risk data used to set 2006 payment rates in April. Medicare Advantage rates have been adjusted by a "budget neutrality" factor since 2003 to prevent overall payments from being reduced while directing higher, risk-adjusted payments to health plans that enroll more costly, chronically ill members. Earlier this year, President Bush's budget estimated that budget-neutrality payments would total $9.2 billion before being phased out in 2011. A new analysis conducted this summer, however, found a much smaller difference between the reported health status of enrollees in Medicare Advantage and in traditional Medicare. Based on those data, the CMS said budget-neutrality payments would total $5.3 billion through 2011. That doesn't mean aggregate payments to Medicare Advantage plans will drop $4 billion, the CMS said. That's because as plans enroll sicker members, the underlying rates they receive will rise to account for enrollees' greater health needs.
Ardent posts loss for 2004
Ardent Health Services reported a loss of $112.1 million for 2004, as revenue climbed 30.3% to $1.61 billion. The Nashville-based company also restated financial results for 2001 through 2003 and the first six months of 2004 after a review found possible violations of accounting policies concerning transactions between Ardent's health plan and its hospitals in the Albuquerque market. Ardent had not reported financial results since those for the second quarter of 2004. It released the restated results in its 2004 10-K, which had been delayed for the review. Ardent said some of its business initiatives were disrupted in the previous year because executives were focusing on the accounting inquiry. The company also said its labor costs, particularly for nurses, were up in 2004, as well as its costs for malpractice and workers' compensation. In addition, Ardent said it continues to integrate acquisitions made in the past two years, including 10-hospital Hillcrest Health System, Tulsa, Okla. Results for 2001 and 2002 were not significantly changed. The company owns or operates 15 hospitals in three states.