Financial Advice for Retirement, Social Security, IRAs and Estate Planning

Coming Changes in Medicare/Medicare Advantage

Last update on: Feb 02 2017

More changes, none of them positive, are on the way for those enrolled in Medicare or Medicare Advantage.

First are the broader changes that apply to all Medicare prescription drug beneficiaries. The Center for Medicare and Medicaid quietly released a proposal to limit the types of drugs that are protected under the program. Those in the prescription drug program have been guaranteed access to all or substantially all of the drugs in certain classes. The CMS proposes eliminating from that protected status drugs used to suppress immune systems for transplant patients, antidepressants, and antipsychotics. Presumably, if the proposal goes through CMS will use the authority to eliminate coverage for the most expensive medicines in these categories. Read details here.

The other change affects the approximately one-third of Medicare beneficiaries who are enrolled in the Medicare Advantage programs. These plans are very popular. Enrollment increased by about 9% over the last year. One place they aren’t popular, however, is in the administration and some parts of Washington, D.C. The Affordable Care Act of 2010 began making scheduled reductions in reimbursements to insurers under the program. The latest reductions were announced recently. As usual, the cuts were announced in vague and technical ways, so at this point insurers aren’t sure how much less they will receive for reimbursements and how they’ll have to adjust their plans in response. In the past, Medicare Advantage plans have had to reduce coverage, increase premiums, deductibles, and copayments, or a combination of all those. You can read details here.

Medicare beneficiaries are key to balancing the budget and paying for the subsidies under the Affordable Care Act. Beneficiaries and future beneficiaries have to keep up with changes and have flexibility and cushions in their plans so they can adapt to more changes.

An annual notice released Friday after the markets closed would reduce Medicare Advantage spending by 3.55 percent. The figure is based on trends in health care spending, which has grown at a historically low pace in recent years. The annual rate adjustment — which is only one of the payment changes — is calculated through a complicated set of formulas, and analysts were still sorting out the 148-page proposal that CMS released late in the afternoon to assess the total impact on the increasingly popular program for seniors.

Lambert van der Walde, a former CMS official under President George W. Bush who now advises investment firms, said the cut is bigger than the industry expected, given estimates the government provided in December.

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