In a highly anticipated announcement, CMS revealed yesterday that they
were not moving forward with a proposed 2.3% cut in Medicare Advantage
reimbursement rates for the 2014 plan year. In addition to reversing
position on this highly controversial rate cut, CMS further announced
that they will actually be increasing the payment rate by 3.3% for the
coming year.

This reversal is great news to both consumers and insurance agents involved
with Medicare Advantage. Many health insurers had estimated that a cut
of that magnitude – coupled with other anticipated changes to the
Medicare Advantage program for 2014 – could have resulted in some
combination of massive premium increases, benefit reductions, or plan
eliminations.

As a result of yesterday’s news, it appears that the overall stability of
the Medicare Advantage market in 2014 will be greater than anticipated
following the CMS Advance Notice and Draft Call Letter issued in
February.

One of the key items that may have led to this decision may have been the
way that Congress has handled the “Doc Fix” each year. Many news outlets
reported last week that there were ongoing discussions trying to
resolve how Medicare Advantage rates were being cut, while Congress was
perpetually refusing to cut the rates paid to doctors through Original
Medicare.