Issues & Insights
U.S. Army photo by Spc. Miguel Pena

Prevent the ‘Pandemic Penalty’ on Seniors

The COVID-19 pandemic has hit seniors particularly hard. While no one is spared the risks of this virus, roughly three out of four deaths involve patients over age 65, many of whom also have one or more underlying medical conditions. 

But it is not just exposure to COVID-19 that threatens seniors. There is also a threat to seniors’ future health benefits if the Centers for Medicare and Medicaid Services (CMS) does not adjust its payment formulas for Medicare Advantage in response to the pandemic’s impact on health care.

More than 24 million Americans choose Medicare Advantage (MA) plans because of their comprehensive and cost-effective approach to providing care. Each year, CMS is required by law and regulation to decide how much it will pay MA plans, known as the “MA rate notice,” based on the medical experience of the prior year. This is a sensible approach that helps ensure that the health status and utilization of medical services by seniors are reflected in subsequent rates.

The MA rate notice is finalized early in the year so that Medicare Advantage plans have time to submit their bids for the following year. Unfortunately, the April 6 rate notice this year, which was issued at a time consistent with historic practice, came at the height of the COVID-19 pandemic. Why does this matter? 

It matters because millions of seniors have stopped seeking normal medical care because many health care providers were forced to reserve their services for people afflicted with the coronavirus, were closed or were only accepting patients via telehealth. One Harvard analysis found that medical appointments had dropped precipitously, with cardiology, gastroenterology and urology services declining by 60% and more. This means that COVID-19 has actually led to a decline in utilization of health care and that costs this year will be lower than normal, thus skewing CMS’ calculation.

Compounding this anomaly is the reality that no one has any idea what the cost of vaccines, treatments, testing, hospitalization, etc., will be in 2021. The combined effect of lower health care utilization this year with unknowable health care utilization in 2021 creates a substantial threat to seniors. If CMS does not adjust its typical formulas, seniors with Medicare Advantage plans could face higher premiums, increased out-of-pocket costs, fewer services or a combination of all three. 

This potential “pandemic penalty” on seniors is particularly gut-wrenching because they would essentially be penalized for not seeing their doctor because their offices were either closed due to the pandemic, or access was limited to treating COVID-19 patients. 

Will CMS adjust its formula? We don’t know. It has the authority to do so, and the extraordinary circumstances facing the country suggest it should. But the uncertainty only adds to the anxiety of seniors, especially those on a fixed income. 

It’s clear that we are not yet done fighting the coronavirus, and likely won’t be for some time. During this period, seniors will remain particularly vulnerable to the pandemic and need the support of reliable, high-quality and affordable health care to get them through it. Surely seniors have enough on their mind without worrying about whether or not Medicare will raise their costs or reduce their benefits during the pandemic.

Seniors are counting on CMS to do the right thing and make the necessary adjustments so that seniors won’t be hit with a 2021 Medicare pandemic penalty.

Jim Martin is the founder and chairman of the 60 Plus Association.

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