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Government reverses plan to cut Medicare Advantage rate

By Jen Christensen, CNN
April 2, 2013 -- Updated 1425 GMT (2225 HKT)
About 25% of the 47 million Americans on Medicare pay more to have Medicare Advantage.
About 25% of the 47 million Americans on Medicare pay more to have Medicare Advantage.
STORY HIGHLIGHTS
  • The Centers for Medicare and Medicaid Services reverses a proposed cut
  • Initially, they proposed giving the insurance companies who manage them 2.3% less
  • Instead, the organization announced a 3.3% increase

(CNN) -- The federal government has reversed a proposed cut that could have left millions who get their health insurance through the Medicare Advantage plan paying more for coverage.

The Centers for Medicare and Medicaid Services (CMS) announced Monday the final Medicare Advantage rates for 2014.

CMS had initially proposed a 2.3% reduction in what the government pays the insurance companies that provide the plans -- a move that would have saved the government money but potentially would cost the public more.

However, CMS on Monday announced a 3.3% increase instead.

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Insurance companies were upset by the proposed cut, and spent the public comment period time lobbying legislators and running ads against it.

Ads from the America's Health Insurance Plans' Coalition for Medicare Choices called the proposal "drastic" and "too much" and featured seniors saying they can't afford to pay more for health care.

About 25% of the 47 million Americans on Medicare pay more to have Medicare Advantage. The plans are run by private insurance companies that are reimbursed by the government for doing so.

The plans vary, but they offer the elderly more than they would get with regular Medicare. Most plans offer prescription drug coverage; some also offer dental and vision. All the plans cap a person's out-of-pocket expenses, while regular Medicare does not.

Seniors won't know what their out-of-pocket costs will be until the fall, when insurance companies put in their bids for government work.

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