(San Juan, August 24, 2023) Official financial reports filed by Puerto Rico Medicare Advantage (MA) organizations as of and for the six month period ending June 30th, reveal significant losses operating totaling approximately $240 million, adding urgency to the need to fix persisting inequities in Medicare Advantage (MA) funds, according to Roberto Pando Cintrón, president of the Medicaid and Medicare Advantage Products Association (MMAPA). The reports required for every licensed health insurance plan and healthcare service organization are published by the National Association of Insurance Commissioners (NAIC).
“With a 94% penetration rate among eligible beneficiaries, Medicare Advantage has become the backbone of the health system on the island. MA plans in Puerto Rico must serve a population that is 40% under the Federal Poverty Level (FPL), while also competing with states to maintain health professionals on the island. These 2023 financial results are a wake-up call that Puerto Rico still has a core issue that needs to be addressed with MA funding,” said Pando.
The unprecedented financial scenario occurs as MA plans face a fund reduction of approximately 2% for 2024, the first funding cut in seven years. Earlier this year, CMS unveiled an even more aggressive MA rate proposal that would have resulted in a decrease of 10% and nearly $800 million in funding cuts. As documented by actuarial firms Wakely and Milliman, the negative impact of the new model for MA beneficiaries was calculated to be 3 times worse for Puerto Rico than the national average. CMS’ decision to implement the changes over a 3-year phase in period represents only a temporary relief, as the result still translates into the first reduction in MA revenues since 2017, according to MMAPA President.
“The losses experienced so far and projected for the remainder of 2023, along with the 2024 additional funding cuts, will inevitably have an impact in the level of benefits covered and in medical provider compensation. The unique and core issue in Puerto Rico is the dramatic and worsening disparity in MA rates. Plans must pay the same price for prescription drugs as in the states but must manage it with one third (1/3) of the budget. Adding to these challenges, we face cost pressures amplified by the ongoing post-COVID increase in utilization of ambulatory services that plans in the states are also observing”, added Pando Cintrón.
For 2024, MA base rates for Puerto Rico will stand 21% below those of the US Virgin Islands, 35% below those for the lowest state (Hawaii), and 39% below the national average. The main proposals for remediating existing funding inequities include increasing Puerto Rico MA base rates to the same levels as those of the US Virgin Islands and including in Medicaid the funding to pay for the Medicare Part B member premium for the dual eligible beneficiaries ($164.90 monthly). Both measures are already implemented in other territories.
“Medicare Advantage serves over 650,000 beneficiaries in Puerto Rico, and its financial stability is crucial for Puerto Rico’s entire health care system. We urge the federal government to promptly address these inequities and provide Medicare beneficiaries in the island a fair chance at ensuring the future of the MA program. The status quo means benefits will be cut, and no space to continue mitigating provider compensation disparities,” stated Pando. “We are ready to continue to work closely with CMS, HHS and the Biden administration to implement solutions to end Puerto Rico’s funding inequities,” Pando concluded.
The Medicaid and Medicare Advantage Programs Association (MMAPA) is a non-profit organization composed of the leading Medicaid and Medicare Advantage organizations in Puerto Rico. Founded in 2009, MMAPA advocates for increased government investment in the Puerto Rican health care system.
Media Relations Contact:
Ana María Santiago
Lic. #R-060
787-319-1415
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