CMS announces Medicare cost savings, expanded coverage for 2014

The Centers for Medicare and Medicaid Services (CMS) announced new proposed policies this week that the agency says will result in increased benefits for beneficiaries.

The 2014 Advance Notice and Draft Call Letter improves payment accuracy for Medicare Advantage (Part C) and the Medicare prescription drug (Part D) plans for 2014 without shifting cost to beneficiaries, according to CMS.

Medicare Advantage premiums have fallen by 10% since the Affordable Care Act (ACA) was passed in 2010, and enrollment in the program is expected to increase by 28% this year alone. The costs of the defined standard Part D plan also will be lower in 2014 than they are this year, and the deductible will decrease from $325 in 2013 to $310 in 2014.

Also, for the first time since the inception of Medicare Part D, the 2014 prescription drug benefit will have lower co-payments and deductibles than in 2013. Costs are decreasing at the same time that coverage is increasing, CMS says. Other improvements slated for 2014 include better coordination of care and more shared decision-making within the Medicare Advantage program

Another rule announced by CMS this week would implement the ACA’s medical loss ratio (MLR) requirements for Medicare Advantage and prescription drug (Part C and Part D) plans that aim to increase accountability and transparency. The rule limits how much can be spent on plan marketing, overhead, and profit, according to CMS. The ACA mandates that Medicare health and drug plans must meet a minimum MLR starting in 2014. Plans must spend at least 85% of revenue on clinical services, prescription drugs, quality improvements, and/or direct benefits to Medicare beneficiaries in the form of reduced premiums.

CMS is now accepting public comment on both rules. The full rules can be found here.

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