Here is a report from AHIP which was written by the actuarial firm Oliver Wyman. This goes into much greater detail on the impacts of the various proposals in CMS Advance Notice of Medicare Advantage payment rates for 2015. Wyman pegs the overall rate reduction as 5.9% which includes averages for both Elimination of bonus for 3.0 and 3.5 stars for 2015 (-1.9%) and projected increase in insurer fee for 2015 (-0.8%).
It’s important to note that the insurer fee and the elimination of bonuses don’t impact all plans equally. For example, a 4.0 star rated plan (or higher) will see no impact on the elimination of the bonus. A 3.0 star plan will see an approximate 3% reduction and a 3.5 star plan will see an approximate 3.5% reduction. Further, a non-profit plan will only see about half the impact of the insurer fee (-0.4%). So, here is a grid that’s a little more granular (based on the Wyman calculations, adjusted for tax status and Star rating):
Average change: -5.9% or approximately $50/member/month
For Profit Plans:
3.0 Star Plans: -7.0% or approximately $59/month
3.5 Star Plans: -7.5% or approximately $63/month
All other Plans: -4% or approximately $33/month (Plans “Too new to be rated” will either get assigned a weighted average of other existing plans within the Parent organization or will be assigned a 3.5% bonus if the Parent has no other rated plans.)
Non Profit Plans:
3.0 Star Plans: -6.6% or approximately $57/month
3.5 Star Plans: -7.1% or approximately $60/month
All other Plan Ratings: -3.6% or approximately $31/month
As you can see, although the average impact will be around $50/month, the range just when accounting for bonuses and loss of tax status goes from a low of $31/month to a high of $63/month which is a little more than double.
For those in double bonus counties, the impact is more extreme. For example, a 3.5 star, for profit plan would lose approximately 11% funding or $94/month! (There are approximately 342 double bonus counties!)