With the help of Senator Kennedy, the Senate passed the “Baucus version” of the Medicare Bill to cut funding for Medicare Advantage by $13.5 billion over 5 years in order to avert a pending 10.6% cut in Physician’s Medicare fees.
President Bush has promised a veto which he may not deliver on given the House and Senate vote. Even so, he likely will not win this fight.
The impact of the funding cuts will likely be felt in Medicare Advantage, generally, in 2010.
While painful, the Medicare Advantage cuts to HMO and PPO products will probably be manageable.
However, the situation is worse for Private Fee for Service. Also included in the bill is a requirement that Private Fee for Service (PFFS) plans would be forced to set up their own networks (like a PPO). This will force some Private Fee for Service insurers to drop their plans, according to the Congressional Budget Office.
I’ll continue to blog on this issue as I hear more from carriers on their analysis of the impact and I’ll also keep you up to date with what I believe will be the proper strategies for insurance agents to take with clients in 2009 and beyond.
Feel free to add your comments below!
Craig
J,
You are correct. If the PFFS plan were to terminate, there would be a guarantee issue for Medicare Supplement.
Craig