Shortly after announcing plans to hike payments to privateinsurance plans in Medicare Advantage, the Centers forMedicaid and Medicare Services proposed cutting those made to the18 percent of Medicare Advantage plans sponsored byemployers and unions.

Roughly 2.7 million retirees are enrolled in employer orunion-sponsored MA plans, according to an analysis by Avalere.

As is increasingly the case with many benefits, they are morecommon among public sector employers than in the privatesector.

Technically, CMS is not proposing cutting the payments.

It is suggesting that employer or union-sponsored plans nolonger take place in a bidding process that critics have said allowinsurers to pocket a larger profit margin than usual. Instead,insurers will receive a set amount, based on location.

As part of a lengthy explanation of proposed changes to rates,CMS framed its decision as freeing insurers from the obligation ofsubmitting bids, which the agency said added to administrativecosts.

But CMS also argued that insurers providing employer-sponsoredplans are not vulnerable to the same level as risk as thosecompeting in the individual Medicare Advantage market because theyare essentially guaranteed access to a large pool of retirees fromthe same employer.

Furthermore, retirees in such plans tend to be healthier thanaverage Medicare beneficiaries.

And yet, the agency pointed out, the lower risk has not been ledto lower bids from such plans; last year they were in fact 1percent higher than MA plans bidding for the individual market.

Obviously, insurers aren’t happy with any attempts to rein inprofits and will likely battle CMS’ proposal.

“If you start down a path of disincentivizing employers,employers are likely to drop that coverage, and the burden shiftsback to the government,” Mary Grealy, president of the Healthcare LeadershipCouncil, told Modern Healthcare.