Every American deserves affordable, comprehensive coverage that provides them with access to high-quality care. America’s seniors are clear: Any changes considered by Congress or the Administration should not result in harmful cuts to Medicare Advantage (MA). Cuts to MA, no matter how they are structured, would harm the 27 million seniors and people with disabilities who rely on the program through higher premiums or fewer benefits.
MA has strong bipartisan support because it is a prime example of the government and free market working together to deliver lower costs, more choices, and better outcomes. Seniors are carefully watching three policies that could harm their MA plans: Coding intensity; adding dental, vision, and hearing benefits to original Medicare without considering them in the MA benchmark*; and restructuring the Part D benefit design.
High-Quality Care Relies on Clear Coding
One of the great values of choosing MA is that plans coordinate care and offer benefits and services to help improve the health of enrollees living with chronic health conditions or serious illnesses. Completely identifying each individual’s presenting health conditions and recording them in their patient record is essential to achieving their best health.
But changes to MA payment formulas could reduce the impact that those identified health conditions have on the amount of money plans have to invest in lowering out of pocket costs or offering supplemental benefits designed to address health and social barriers to good health.
In fact, a recent study from Avalere found that an increase to MA’s coding intensity factor could increase premiums by $9 to $25 per month.
This study also examined the state-by-state reduction in the availability of $0 premium plans. Notably, the research finds that increases to MA coding intensity could mean no MA enrollees would have access to a $0 premium plan, a plan option selected by 55% of MA enrollees in 2021. In fact, 66% of enrollees could pay a monthly premium of more than $25 if the coding intensity factor increased to 9%.
This would be particularly harmful to the 40% of MA enrollees who make less than $25,000 per year.
The Potential Costs of Dental, Hearing, Vision Benefits
Today, 98% of people eligible for Medicare have access to an MA plan offering dental, vision, and hearing coverage. People also can choose to have coverage for dental, vision, and hearing through individual dental policies, Medicare Supplement (Medigap) policies with dental, vision, and hearing coverage, employer-provided coverage for working seniors, and the Medicaid program in states where adult dental coverage is provided.
But if Congress decides to add these services to original Medicare, it must be done without harming the 27 million Americans who have MA. A recent analysis from Wakely Consulting Group found that if Congress adds these benefits to original Medicare without adjusting the MA benchmark*, an MA plan would have an average of 48-73% fewer supplemental benefit dollars available to fund innovative benefits such as transportation, meals, in-home services and supports, over-the-counter medicines, or other benefits that the more than 41% of Medicare-eligible Americans have come to rely on.
That amounts to $696-$1,056 a year that a senior or person with disabilities would lose in added benefits that close gaps in care, improve health equity, or offset the impact of social factors on people’s health. It also would limit the ability to maintain plans with $0 premium.
Achieving Lower Drug Prices for Seniors
A lot of attention has been focused on permitting government negotiations as a way to lower drug prices. But an additional proposal currently being considered as part of the Build Back Better (BBB) Act would redesign Medicare Part D. Among the changes are increases in liability for health insurance providers, the elimination of the coverage gap phase of the benefit, and the addition of drug manufacturer liability.
A new study by Oliver Wyman, commissioned by AHIP and the Blue Cross Blue Shield Association, found that by shifting more of the liability to drug manufacturers in the catastrophic phase of Part D, Congress could reduce Part D premiums, and by extension make more supplemental benefits available in integrated MA and Part D plans. In fact, a 1.5 percentage point increase in liability for drug manufacturers in the catastrophic phase would reduce premiums in the basic benefit by about $1 per member per month.
Further, increasing drug manufacturers’ liability in the initial coverage phase D by 3.5 percentage points would reduce the estimated impact on basic premiums by about $1 per member per month, before buy-down.
The Oliver Wyman study also performs the same analysis and reaches similar conclusions for a restructuring proposal introduced in the Senate in 2019: increasing drug manufacturer liability lowers the premium impact for seniors.
Drug prices are out of control, because of the prices that Big Pharma alone sets and controls. By requiring Big Pharma to take on more of the liability for their prices in Part D, Congress can lower seniors’ health care costs while making Big Pharma accountable for their prices.
Lowering Health Care Costs for Seniors
Nearly 27 million Americans – nearly 45% of those eligible – choose MA because it delivers better services, better access to care, and better value. It serves a more racially diverse population than original Medicare, and 95% of seniors with MA would recommend it to their family and friends.
These Americans deserve a strong MA program that continues to deliver the excellence and value they have come to expect. Health insurance providers are committed to working alongside members of Congress to protect MA now and in the future.
*Editor’s Note: The MA benchmark is a base rate against which a health insurance provider submits an MA plan bid to the Centers for Medicare & Medicaid Services (CMS). The plan bid proposes the coverage and benefits for, and payments to, the plan for the benefit year. The benchmark is based on what the equivalent costs would be for the Medicare program if that individual were enrolled in original Medicare.