(Bloomberg) — Insurers such as UnitedHealth Group Inc. and Humana Inc. will see their pay for commercial Medicare policies increased 1.25 percent next year, reversing an earlier government proposal that called for a reduction.
The announcement compares with a base reduction of 0.9 percent proposed in February. Last year, the government set a payment reduction of 4 percent for 2015 as part of the government's plan to bring the cost of privately managed Medicare coverage in line with the traditional program for the elderly and disabled.
UnitedHealth was the top provider of Medicare Advantage plans last year, with about 3 million people on its rolls. Humana had 2.9 million enrollees, and Anthem Inc. served 1.4 million.
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The Obama administration has been pushing to contain costs for Medicare Advantage since the 2010 passage of the Affordable Care Act. At the time, U.S. spending for Advantage beneficiaries was estimated to be as much as 13 percent higher than for people enrolled in traditional Medicare. The government now spends about 2 percent more per person on the private program.
America's Health Insurance Plans, which represents insurers, has called on the U.S. to avoid cutting payments. The industry group has said cuts increase costs for the elderly.
The actual rate change could vary among plans, since Medicare adjusts payments to insurers by location and based on the health of their customers.
About 15.8 million people, or 30 percent of those on Medicare, enrolled in an Advantage policy last year, according to the Medicare Payment Advisory Commission. The government pays insurers a fixed amount to cover each beneficiary in the program, compared with paying for each procedure for traditional Medicare beneficiaries.
With assistance from Alex Wayne in Washington.
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