Leavitt: Administration Opposes Payment Cuts to Medicare Advantage
HHS Secretary Mike Leavitt during a speech before America's Health Insurance Plans on Thursday said that proposed cuts to Medicare Advantage plans should not be made, AP/Houston Chronicle reports (Freking, AP/Houston Chronicle, 3/22).
The House Ways and Means Health Subcommittee on Wednesday held a hearing to examine whether the government overpays MA plans, which are operated by private insurers. Democrats have suggested that extra government payments to MA plans increase premiums and costs for all Medicare beneficiaries.
Earlier this month, the Medicare Payment Advisory Commission issued a report that found Medicare reimbursements for MA plans -- which cover extra benefits, such as vision and hearing tests and treatments -- are 12% higher than reimbursements for the fee-for-service program for equivalent benefits. MedPAC recommended that Medicare reimburse MA plans at the same rate as the traditional fee-for-service program.
The Congressional Budget Office estimates that if MA plans were paid at the same level as traditional Medicare, the government would be able to generate savings of $65 billion over five years.
Subcommittee Chair Pete Stark (D-Calif.) and Senate Finance Committee Chair Max Baucus (D-Mont.) have suggested that cuts to MA plans could be used to provide additional funding for SCHIP, which is up for reauthorization this year (California Healthline, 3/22).
Leavitt in his speech said that cutting managed care payments to insurers is part of an effort by some lawmakers to create a "government-run, one-size-fits-all plan." He said, "There are those who want the government to do the market's job" (CongressDaily, 3/23).
Leavitt said, "The president and I are for competition. If the world has learned anything from the 20th century, it is that the marketplace beats government at controlling costs and delivering value" (Carey, CQ HealthBeat, 3/22). He also said that cutting payments for MA plans would take away needed benefits for many U.S. residents.
According to the AP/Chronicle, health insurers "support expanding" SCHIP, but they "don't want the expansion to come at their expense." They also contend that MA cuts would prove unpopular with seniors.
AHIP President and CEO Karen Ignagni asked, "What member wants to reduce funding for their constituents and take benefits away from their constituents?" (Freking, AP/Houston Chronicle, 3/22).