Enrollment Increases in Medicare Fee-For-Service Plans
Medicare fee-for-service plans are growing in popularity, with enrollment in the plans increasing tenfold to 820,000 during the last two years, the New York Times reports. The increase comes after the federal government raised subsidies for the plans to an average of 11% per beneficiary, according to the Times.
Some insurance industry executives said that figure is an exaggeration, the Times reports. The 2003 Medicare law boosted insurers' subsidies by $14 billion over 10 years in response to some lobbyists' claims that expanding private Medicare plans would reduce federal government spending, according to the Times.
Similar to traditional Medicare, FFS members can choose their own doctors and hospitals, and they pay an average $88.50 monthly premium. Physicians and hospitals treating FFS members receive the same rates as they do through traditional Medicare. Insurers offering the FFS plans say they provide benefits that traditional Medicare does not cover.
In addition, FFS plans offer "predictable" copayments of about $5 to $20 for a physician visit, while beneficiaries enrolled in basic Medicare are responsible for 20% of the provider's fee, the Times reports.
Humana, UnitedHealth and WellPoint are "big players" in the Medicare FFS market, and enrollment is generally concentrated in rural areas and small cities, according to the Times.
Some experts have said that the increased FFS enrollment and subsidies indicate that "government is paying private industry to take Medicare off its hands," the Times reports. In addition, "many see the [FFS] plans as mainly a feeder program in which insurance companies hope to gradually convert members into even more complex, more profitable private Medicare offerings that the government also subsidizes."
Jack Lewin, CEO of the California Medical Association, said FFS plans are a "back-door way of trying to privatize Medicare," adding, "We are very concerned that Congress is going to pull back on funding, and we will be left with a private system that offers fewer benefits and is going to be influenced by Wall Street."
Marilyn Moon of the American Institutes for Research said that FFS plans "are not really being asked to do anything for additional subsidies." She added that she is "unconvinced by the logic that says, 'If we are overpaying the health plans now, they will save us money later.'"
Medicare will pay FFS subsidies totaling $7 billion this year, at least $770 million more than what it would spend to cover beneficiaries in basic Medicare, the Times reports.
CMS Administrator Mark McClellan said the trend "is definitely not a 'push to privatization,'" adding, "The original Medicare program is, and remains, an option for those who prefer it."
Dan Mendelson, a former Clinton administration health official who is now the president of Avalere Health, said FFS plans "should save money for Medicare by improving patient care" (Freudenheim, New York Times, 9/22).