Proposed Medicare loss is a gain for insurers

When is a loss a gain?

It seems the answer is when the loss wasn’t nearly as bad as expected. That’s what major health insurers discovered when the Centers for Medicare and Medicaid Services proposed a slight decline in payments for Medicare Advantage plans.

The proposal issued late last week to drop payments by 0.95%, which could well turn into a gain once rates are negotiated, gave a lift to all insurers in the market. While CMS proposed a rate decrease, the agency said insurers could end up with an increase of 1% if they deliver and bill for more intense services.

Analysts said the proposal should be viewed as a positive.

“Although down rates will create some pressure, we view the initial outlook as a positive development compared to recent years,” Chris Rigg of Susquehanna Financial Group said in a note to clients. “Furthermore, historically the final proposal tends to show some improvement relative to the initial outlook.”

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