What are Biden’s new Medicare cuts and how do they affect you?
A new rule change by CMS has Republicans claiming that the Biden administration wants to make cuts to Medicare funding. Here’s what the change means.
The battle over Medicare funding has both sides claiming the other wants to make cuts to the program. The latest against the Biden administration revolves around new Centers for Medicare and Medicaid Services (CMS) rule changes. Experts who have looked at the proposals find that to call them “cuts” is inaccurate, while fact checkers say it is false. Here’s a breakdown of what is being proposed.
Recently, CMS finalized how Medicare Advantage risk adjustment data validation (RADV) audits are conducted which will take effect 3 April for next year. The changes are designed to improve program integrity increasing the ability of the government to audit Medicare Advantage plans and require plans to return overpayments. Another update would modify the payment formula for how much the government pays insurers based on beneficiaries’ reported health conditions.
How will Biden administration’s new Medicare rules affect you?
Roughly half of Medicare beneficiaries are enrolled in Medicare Advantage, the private plan alternative to traditional Medicare. The Medicare Advantage RADV audit change would allow the federal government to recover overpayments from private insurers, between $4.5 and $4.7 billion over a decade.
That in turn would reduce those companies’ profits which could lead to them reducing benefits or increasing enrollees’ out-of-pocket costs. However, there is no evidence that this would be the case. Similar worries were expressed over Medicare Advantage payment reductions included in the Affordable Care Act, but the opposite happened.
Furthermore, CMS will be adjusting the formula for how it pays insurers, which is done annually as part of a routine process of implementing the law. The agency calculates that the proposed 2024 modifications will result in slightly more than a three percent reduction in payments to Medicare Advantage insurers in 2024. However, other changes will offset those losses and actually boost spending per enrollee by just over one percent in 2024.