(Schenectady, NY)…Back-to-back cuts totaling up to 11.9% of federal reimbursement of Medicare Advantage plans – despite the ever-rising cost of caring for an aging population – have led MVP Health Care, a not-for-profit organization, to discontinue some of its Medicare Advantage products in 2015, Denise V. Gonick, MVP President and Chief Executive Officer, announced today.
“It is with deep regret that I announce that MVP Health Care has been forced to make the hard choice to discontinue certain Medicare Advantage products that currently cover 19,805 of our members statewide due to economics that are truly unsustainable,” Ms. Gonick said at a press conference in Rochester, New York today. “As laudable as these programs are – and they have many outstanding features – MVP can no longer afford to offer them, and we believe plan members – seniors living on fixed incomes – will not be able to afford the premiums we would have to charge for them.”
Ms. Gonick stressed that MVP will continue to offer other Medicare Advantage products in every county currently served. However, federal reimbursement cuts will result in premium increases ranging from $29 to $64.50 a month, or 44.8% on average. Ms. Gonick said that the remaining Medicare Advantage products have coverage more in line with industry standards today, and are sustainable for the foreseeable future.
MVP has committed resources to help members whose plans will not be available in 2015. In letters to be sent to them this week, MVP offers help in finding appropriate alternative plans within MVP or with other insurance carriers.
“This discontinuation is a real problem,” Ms. Gonick explained. “Frankly, it is not fair to our seniors. But MVP is faced with a series of economic issues, including reduced Medicare Advantage payments, sequestration, a reduced Part D subsidy, and a two percent health insurance tax on premiums. At the same time, the cost of medical care continues to spiral upward. There is a large gap between what we can cover and the actual cost of care.”
Medicare Advantage: more value for Medicare dollars
Several studies have shown that Medicare Advantage outperformed conventional fee-for-service (FFS) Medicare both in improving health care quality and reducing use of services that are driving up health care costs. For example, compared to FFS Medicare, Medicare Advantage hospital readmission rates were 13% to 20% lower, and hospitalization rates were 9% lower for seniors with diabetes.
MVP has consistently received a 4 ½ star quality rating (out of a possible five) for its Medicare Advantage program from the federal Centers for Medicare and Medicaid Services (CMS).
Medicare Advantage covers everything that FFS Medicare does, but in addition it emphasizes prevention, provides access to disease management services for chronic conditions, and has programs that measure and improve the quality of care beneficiaries receive. Medicare Advantage also offers members:
- Convenience – one premium covers hospitalization, outpatient visits, and in many cases, prescription drugs;
- More comprehensive coverage – that can include routine vision, hearing, dental, and mental health, which FFS Medicare does not;
- Greater financial protection – Medicare Advantage plans have an annual out-of-pocket limit to protect seniors from catastrophic costs; with FFS Medicare, there is no cap on what a senior can spend on health care each year.
“The reality is that our population is aging and will require more and more health care services, particularly for chronic conditions,” Ms. Gonick said. “This is putting enormous pressure on our health care system, and Medicare Advantage is an effective tool to manage it. It delivers much more value for each dollar spent compared to conventional Medicare, and it is short-sighted to undercut a program proven to work.”
Market disruption will continue
Ms. Gonick also remarked that MVP and other health insurers in New York State and elsewhere face several more years of disruption as health care reform continues to roll out, and other changes disrupt the health care field. As a result, MVP will operate at a deficit into 2015, she said. “MVP supports the goal of the ACA, which is to make sure everyone has access to health care,” Ms. Gonick said. “Unfortunately, health care costs continue to soar. You can’t spend money that you don’t have.”
But, she pointed out that at the same time, health care reform gives MVP the opportunity to build an organization focused on consumers and their needs. “Consumers want great health care at a competitive price,” she said. “So we are looking at every operation, process, and product and asking, does this still make sense in the new consumer-driven world of health care? How can we do what we are doing better?”
“MVP is determined to make the hard choices needed in order to weather the storm and continue to protect and serve the more than 700,000 members who entrust us with their health,” emphasized Gonick. “We are confident that MVP will continue to transform into a streamlined and innovative provider offering great value for every dollar spent on health care.”