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First-ever 85% medical-loss ratio set for Medicare private plans

NEWS IN BRIEF — Posted Feb. 25, 2013

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Proposed Medicare regulations would create new patient protections in Medicare Advantage and Part D of the entitlement program, Centers for Medicare & Medicaid Services officials said in a Feb. 15 announcement.

CMS officials drafted a rule to implement a minimum medical-loss ratio for Medicare Advantage plans and Part D drug plans by 2014, which is a requirement under the Affordable Care Act. The proposed regulation would mandate that insurers spend at least 85% of revenue on clinical services, prescription drugs and quality improvements. Plans falling short of that mark also could provide direct benefits, such as reduced premiums, back to patients. Insurers can direct the remainder of the money toward profits, salaries, marketing and other administrative purposes.

“We are working to ensure that people with Medicare have affordable access to health and drug plans, while making certain that plans are providing value to Medicare and taxpayers,” said Jonathan Blum, CMS acting principal deputy administrator and director of the agency’s Center for Medicare.

A preliminary estimate shows that Medicare Advantage premiums have been stable in recent years and actually will be lower in 2014. Spending growth in the program is expected to decrease by 2.2%.

Patients also will see lower Part D premiums in 2014. The 2014 drug benefit deductible is projected to be $310, down 4.6% from $325 in 2013.

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