Every few years, it seems, commentators predict the end of the world will occur at a certain date. Each time, the date passes and the world keeps turning. Much like those apocalyptic predictions, when the Centers for Medicare & Medicaid Services announces significant changes to the popular Medicare Advantage program, lobbyists and insurers decry the changes and say that the program modifications will result in skyrocketing premiums and dwindling benefits, with some even predicting the eventual demise of Medicare Advantage.

Most recently, CMS announced a proposal that would cut federal payments to MA plans by 2.3 percent in 2014, which could be finalized in early April. The announcement by CMS unleashed a firestorm of dire predictions from groups such as America's Health Insurance Plans, the health plan industry's largest lobbying group. AHIP warned that MA members could see between $50 to $90 per month in premium increases and/or benefit reductions because of the proposed CMS cuts, Accountable Care Act cuts, and tax increases.

In 2010, similar predictions were made by many in the industry when government payments to Medicare Advantage plans began decreasing. Even CMS? actuary had predicted that MA enrollment would be slashed in half by 2017. But much of the cuts were negated by the MA star ratings program, which gives plans that earn a score of at least 3 out of 5 stars a reimbursement rate bonus. Since 2010, CMS estimates that MA premiums have decreased by 10 percent and enrollment has increased by 28 percent.

It remains to be seen if CMS? proposed cuts will actually take effect in 2014. Oftentimes, CMS alters course on proposed rules when strong criticism is received from stakeholders. Even if the cuts do take effect in 2014, many MA plans have mastered the practice of ?upcoding,? which results in higher risk-adjustment payments for members who may be classified as sicker than they really are. A new report by the Government Accountability Office estimates that ?upcoding? resulted in between $3.2 billion to $5.1 billion in overpayments to MA plans from 2010 to 2012. So far, CMS audits have had little success in weeding out this practice.

MA will remain a popular program as baby boomers continue to age into the Medicare program. Even if more MA cuts happen, there will likely be concessions either from CMS or Congress, to soften the blow of the cuts. Just look at the MA star ratings program. Originally, the program would only allow bonuses for plans that receive at least a 4-star rating, but CMS implemented a demonstration to give 3-star plans a bonus for three years. Nearly all plans have a rating of at least 3 stars.

After all, most in Congress would like to avoid an onslaught of calls and letters from angry elderly constituents who may decide to vote for someone else because their Medicare benefits were harmed.

Follow Joel Peyton on Twitter at @JoelPeytonHLI

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