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BRT Letter to HHS Regarding 45-Day Notice

The Business Roundtable is an association of chief executive officers of leading U.S. companies.  Together, our members’ companies employ more than 16 million individuals and provide health care coverage to nearly 40 million American workers, retirees, and their families.  BRT strongly supports having personal options available for Medicare beneficiaries – including Medicare Advantage and traditional Medicare.  For these reasons, we are writing you to express our concern with the proposed reductions in the 45-Day Notice released on February 15, 2013.

The 45-Day Notice proposes a negative Medicare Advantage (MA) Growth Percentage at a time when health care costs continue to rise.  This 2.3 percent cut is the most severe MA Growth Percentage reduction since the introduction of the MA program.  When combined with mandated reductions in MA reimbursement required by the Patient Protection and Affordable Care Act, 2014 MA payments will fall by approximately $11 billion in 2014.  This reduction equates to between $50 and $90 in higher costs for the average MA beneficiary per month in 2014, per an Oliver Wyman study released on February 26, 2013.  The chronically ill, who use more health care services and often choose MA to assist in paying for them, will likely experience larger cost hikes than the average beneficiary.

We are writing to urge you to use your authority under Sections 1853(c)(6) and 1876(a)(4) of the Social Security Act to calculate MA rates for 2014 based on an assumption that legislation will be enacted later this year to maintain Medicare physician payment rates at their current levels in 2014, without any reduction.  Congress has never failed to ensure these rates are not reduced, and we do believe Congress will act again.

Under the 45-Day Notice that CMS released on February 15, the preliminary estimate of the 2014 MA update factor assumes that the scheduled 30 percent reduction in the Medicare physician fee schedule will be implemented on January 1, 2014.  This assumption is highly problematic because – even though it almost certainly will turn out to be wrong – it translates into lower funding to support, the health benefits of the 14 million Medicare beneficiaries who currently are enrolled in MA plans.

Over the past decade, Congress repeatedly has approved Medicare physician payment “fixes” to block similar reductions from taking effect.  These bills consistently have been passed with strong bipartisan support and we are confident that such legislation will be passed again in the 2013 session.

Having closely examined the relevant statutory provisions of the Social Security Act, we believe it is clear that Sections 1853(c)(6) and 1876(a)(4) require CMS to develop “estimates” of the projected growth rate in Medicare expenditures and applicable county-specific fee-for-service costs that serve as the basis for MA rates and would permit the agency to rely on the best available information.  These statutory provisions grant CMS a significant degree of flexibility in determining how to calculate estimated rates for MA payments.  Based on our analysis of these provisions, we ask that you use your authority under current law to calculate 2014 MA rates based on an assumption that a Medicare physician payment “fix” will be enacted as usual sometime this year.  We recognize that this assumption is also part of the Part B premium calculation and furthermore CMS requires MA plans to assume this assumption in their bids.

We are concerned that if CMS fails to use its authority to assume the doc-fix when calculating the 2014 MA rates, every MA beneficiary will experience disruption in health care benefits and personal choices in the Medicare program.  Furthermore, there are additional changes that should not be made, such as those to the risk adjustment methodology, in order to protect the Medicare Advantage program and the 14 million seniors who have chosen this coverage.  We ask that you address this through the administrative process to reduce the impact on beneficiaries.

Thank you for your attention to this important issue.  We look forward to hearing from you regarding your decision. 

Sincerely,

John Engler

JE/mg

 

C:       The Honorable Harry Reid

The Honorable Mitch McConnell

The Honorable John Boehner

The Honorable Nancy Pelosi      

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