Medicare Advantage Payment Rate to Rise in 2014 Instead

April 5th, 2013 | Posted by Angela Chen in Medicare Advantage | Medicare News
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Medicare Advantage Payment Rates to Rise in 20142014 Medicare Advantage payment rates are set to increase by more than 3%, rather than decrease as previously stated.

Medicare Advantage plans are offered by private health insurance companies, sponsored by government payments. These plans, also known as Part C or MA plans, are popular options for Medicare beneficiaries to receive their Part A and Part B coverage, along with additional benefits. These additional benefits, such as coverage for vision services and/or prescription drug costs, are offered in part due to government funding.

Back in February, we reported that Medicare Advantage payment cuts were planned for the coming year. In order reduce Medicare costs, pay cuts were proposed to decrease the amount of money the government pays to incentivize private insurers to offer MA plans. This resulted in concern for all beneficiaries and health professionals affected, as well as intense lobbying by the health insurance industry and members of Congress. Some insurers even considered dropping their Medicare Advantage business in 2014 if the government did not back down on these cuts, which could affect up to 14 million individuals enrolled in an MA plan.

However, “after careful consideration of public comments,” the Centers for Medicare and Medicaid Services (CMS) has since reversed its stance on cuts to 2014 Medicare Advantage payment rates.

On Monday, CMS announced that the U.S. government will boost the 2014 payment rate for insurers who offer Medicare Advantage health plans by 3.3%, a reversal of the proposed 2.3% payment cut announced in February. The payment increase is based on the assumption that Congress will override scheduled cuts in physician reimbursements for an 11th consecutive year. This turnaround has already affected many major health insurance companies directly by improving their company shares and may be worth billions of dollars to the industry in the next year alone in providing beneficiaries with Part C coverage.

“The policies announced further the agency’s goal of improving payment accuracy in all our programs, while at the same time ensuring program stability and preserving beneficiary choice,” as stated by Jonathan Blum, the acting principal deputy administrator of CMS.

For now, it seems that Medicare Advantage beneficiaries may not have to worry about their out-of-pocket coverage costs changing drastically just yet. However, keep in mind that the Affordable Care Act had called for a $716 billion cut in overall cuts to Medicare costs, with $308 billion coming from the Medicare Advantage program. Only about 4% of the cuts had been implemented at the end of 2012. Although this Medicare Advantage payment rate increase softens the blow slightly, beneficiaries can expect additional cuts to be proposed in the coming years.

Reuters and the Associated Press also reported on this story.


Medicare hasn’t approved or endorsed this information.


As a contributor and editor of the PlanPrescriber Blog, has extensive knowledge about the Medicare program and the various associated private insurance products, including Medicare Advantage, Medicare Part D, and Medicare Supplement (Medigap) plans. Her areas of interest include health and wellness, marketing, journalism, and social media.

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