Insurers brace for new Medicare cuts

NEW YORK - The U.S. government is expected to announce this week the proposed payment rates for insurer-run Medicare plans in 2015, but industry officials say the anticipated cuts will mean higher co-pays and fewer benefits for seniors.

Of the more than 50 million older Americans who receive coverage through Medicare, about 15 million are enrolled in Medicare Advantage plans offered by companies such as UnitedHealth Group Inc., Humana Inc., and Aetna Inc. The rest use Medicare fee-for-service programs, in which doctors are reimbursed by the government for patient visits and procedures.

Each February, the Centers for Medicare and Medicaid Services proposes reimbursement rates that it agrees to pay insurers for managing the privately run programs. It publishes a final rate 45 days later.

Insurers are bracing for a proposed cut of 6 to 7 percent when the government makes the information public in an announcement expected Friday, according to the latest industry and analyst forecasts. Health insurance executives have been lobbying against cuts of that magnitude, saying they would have no choice but to pass on a significant part to seniors to keep their business intact.

Aetna, which has about one million Medicare Advantage members, said that to keep costs in line with cuts in recent years, it has changed its network of doctors and hospitals, among other efforts.

"If you can't solve the reduction based on those activities, then you have to resort to things that are much more visible to the beneficiaries, which can range from benefit reductions, and either premium increases or the introduction of a premium," said Fran Soistman, executive vice president and head of Government Services at Aetna.

Another possibility for insurers is eliminating plans and withdrawing from certain markets. Many did that last year after the government cut rates by nearly 6 percent.

"The concern is that a second consecutive 6 percent cut to the program will be devastating for seniors," said Robert Zirkelbach, spokesman for the health-care industry's key trade and lobbying group, America's Health Insurance Plans.