MedPAC to U.S. Congress: Reduce Government Payments to Medicare Advantage Plans

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March 2, 2010 Tuesday 03:49 PM EST

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MedPAC to U.S. Congress: Reduce Government Payments to Medicare Advantage Plans

Fran Lysiak

WASHINGTON

The Medicare Payment Advisory Commission is recommending to Congress that the U.S. government's Medicare health insurance program for seniors reduce payments to private Medicare Advantage plans.

"The commission remains concerned that in 2010, Medicare's payments to MA plans will again exceed Medicare FFS spending for similar beneficiaries," said the commission in a statement. "MA plans will continue to provide enhanced benefits, but at a high cost to the Medicare program."

MedPAC, a congressional agency that provides independent policy and advice to Congress on issues affecting the Medicare program, said it "reiterates its recommendations for financial neutrality" between MA and fee-for-service payments.

Robert Zirkelbach, a spokesman for America's Health Insurance Plans, said cuts to the MA program will "result in higher premiums, reduced benefits, and fewer health care choices for millions of seniors."

President Barack Obama and many Democrats in Congress have been critical of private MA plans and have said for some time they want to reduce the government's payments to them. They want to bring reimbursement payments in line with 100% of traditional, fee-for-service Medicare.

At his Feb. 25 bipartisan summit on health reform, Obama dubbed MA as a "program that's going to insurance companies."

The commission reiterated recommendations it made in 2005, which include that Congress should set the benchmarks that the Centers for Medicare & Medicaid Services uses to evaluate MA plan bids at 100% of the fee-for-service costs; and Congress also should redirect Medicare's portion of savings from bids below the benchmarks to a fund that would redistribute the savings back to MA plans based on quality measures. Pay-for-performance should apply in MA to reward plans that provide higher quality care.

Seniors in MA spent fewer days in a hospital, were subject to fewer hospital re-admissions, and were less likely to have "potentially avoidable" admissions, for common conditions ranging from uncontrolled diabetes to dehydration, according to an analysis of publicly available data from the Agency for Healthcare Research and Quality.

MA plans offer seniors coverage for physician care, hospital services and prescription drugs and also may include coverage for dental, vision and hearing. But they can be more expensive than traditional Medicare if beneficiaries get care outside their plan's provider network.

"MA plans provide enhanced benefits to enrollees, but, these enhanced benefits are largely financed by taxpayers and beneficiaries -- and at a high cost," MedPAC said. CMS estimates the Part B premium was $3.35 a month higher in 2009 than it would have been if spending for MA was the same as in FFS.

Enrollees in MA plans represented 19% of the 44 million enrolled in Medicare (BestWire, Feb. 23, 2009).

MedPAC, however, said it "recognizes that managing updates and relative payment rates will not solve the fundamental problem with current Medicare FFS payment systems -- that providers are paid more when they deliver more services without regard to the quality or value of those additional services."

(By Fran Matso Lysiak, senior associate editor, BestWeek: [email protected])

March 3, 2010

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