Under intense lobbying pressure, CMS to issue final Advantage rates

Lots of lobbyists will be watching when the CMS announces final 2015 payment policies for Medicare Advantage plans on April 7.

While the agency's calculus to determine rates is complex, most financial analysts pegged the proposed cuts at 3% to 5% when the CMS announced its preliminary policy Feb. 21. That was a smaller cut than most insurers and analysts anticipated. The stock prices of the two largest Advantage insurers, UnitedHealth Group and Humana, spiked in the following weeks. Combined, the two companies cover more than a third of all enrollees.

America's Health Insurance Plans has been lobbying feverishly to soften the proposed cuts, arguing they'll lead to skimpier benefits and higher costs for seniors. It seems that every commercial break on CNN features an AHIP ad warning of dire consequences if the rates aren't revised upward.

That message has found a receptive ear in Congress. A bipartisan group of 204 House members sent a letter to CMS Administrator Marilyn Tavenner cautioning that “Medicare Advantage beneficiaries should not be forced to shoulder any further funding cuts to the program.” The government spends significantly more per Advantage enrollee than it spends on traditional Medicare beneficiaries.

The Obama administration's decision this week likely will be affected by election considerations. Medicare's 2015 enrollment period for Advantage plans begins shortly before the November elections. Seniors are expected to represent a disproportionate share of voters.

“If the senior population feels they have been done wrong, they have a chance to vote in November,” said Steve Zaharuk, a senior vice president with Moody's Investors Service.

Follow Paul Demko on Twitter: @MHPDemko