Surprising Reversal: Medicare Advantage Payout Rates Headed Higher

Decision changes original plan to cut fees

   

NewLetters Surprising Reversal: Medicare Advantage Payout Rates Headed HigherIn an unexpected decision, the federal government has decided to raise the fees paid by Medicare Advantage.

The decision — which comes after an intense period of lobbying by the health care industry — reverses an earlier decision to cut the rates, reports CNN.

Initially, the Centers for Medicare & Medicaid Services proposed a 2.3% reduction in the fees it would pay to health care providers. In the fee schedule released Monday, however, the CMMS will provide an increase of 3.3% instead.

Medicare Advantage is a system in which seniors who qualify for Medicare elect to receive their benefits through private insurers. With the government paying less, providers would have either had to accept less in fees or pass that difference along to patients.

In its announcement of the new rate schedule, CMMS said the higher fees came about “after careful consideration of public comments.”

Several insurance stocks were spiking on the news, including Humana (NYSE:HUM) and UnitedHealth Group (NYSE:UNH). Both were up more than 6% as of this writing.

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