In February, the Centers for Medicare & Medicaid Services released the Advance Notice Call Letter, which outlined proposed changes to the Medicare Advantage program in 2014. One of the most controversial components of the letter was that CMS planned to cut reimbursement rates to MA plans by 2.2 percent. News of the proposed cut caused an outcry from lobbyists, politicians, and seniors. Some predicted that if the cuts happened, seniors could see up to $90 per month in premium increases and/or benefit reductions.

But yesterday, on April Fool's Day, MA plans received much better news when CMS released the Final 2014 Call Letter. Instead of a harsh cut, CMS will give MA plans a 3.3 percent rate increase. Last week there were indications that CMS would backpedal on the rate cut. The Congressional Research Service released a report that indicated that CMS based reimbursement rate cuts on the assumption that Medicare payments to physicians again would be decreased. But the CRS report said, since Congress has stopped such cuts in the past and will likely continue to do so in the future, CMS could assume that there will be another ?doc fix? and could raise the reimbursement rates. Sure enough, in the Final Call Letter, CMS indicated part of the reasoning behind the decision to increase the rates was that Medicare payment cuts to physicians probably wouldn?t happen.

Last month, we predicted in this blog that there was a good possibility CMS would overturn the decision to cut MA reimbursement rates. More often than not, CMS revises proposed reimbursement rates changes after comments from stakeholders.

Furthermore, the cuts were unlikely to happen because the MA program continues to grow in popularity among seniors. Since the advent of the Affordable Care Act in 2010, average MA plan premiums have decreased by 10 percent and enrollment has increased by 25 percent. Overall, about 27 percent of Medicare beneficiaries are enrolled in an MA plan.

Enrollment in the MA program will likely continue to increase as younger seniors are more comfortable with things such as provider networks. Also, more employer groups are beginning to switch from offering retirees Medicare supplement plans to MA plans because they are often a lower cost. Moreover, MA plans offer enticing benefits such as free gym memberships and vision, dental, or hearing coverage that Original Medicare does not offer.

The popularity of the program was also evident based on the amount of lobbying that occurred between the release of the Advance Notice Call Letter and the Final Call letter. America's Health Insurance Plans ran television and print advertisements, resulting in more than 40,000 seniors contacting their legislators urging them to help influence CMS to block the cuts. During the lobbying effort, many in Congress wrote letters to CMS indicating that they opposed the cuts.

If the cuts had actually gone through, then those in Congress might have seen something similar to this when seniors received their summary of benefits in 2014.

Follow Joel Peyton on Twitter @JoelPeytonHLI

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