MedPAC Recommends Higher Upfront Costs for Medicare Beneficiaries
Medicare beneficiaries should face higher upfront costs to give them a financial incentive to avoid costly and unnecessary treatments, according to a Medicare Payment Advisory Commission report released on Friday, Reuters reports.
The report recommends changes in the way Medicare handles Medigap and other supplemental insurance policies. About 90% of Medicare beneficiaries purchase such plans to avoid many out-of-pocket costs, including a 20% cost-sharing requirement for physician visits and outpatient care. As a result, beneficiaries have little incentive to avoid costly and unnecessary procedures, according to Reuters (Morgan, Reuters, 6/15).
The report suggests that the cost-sharing provision be replaced with fixed-dollar copayments. Although MedPAC did not include a specific dollar amount for the suggested copayments, an example included in the report estimated the effect of a 20% charge, with an out-of-pocket cap at $5,000.
The effect on beneficiaries would depend on whether they changed their supplemental coverage, CQ HealthBeat reports. If most beneficiaries kept their Medigap plans, about 70% would face higher costs of more than $250 annually.
If all beneficiaries dropped Medigap coverage, about 32% would face higher costs of $250 or more annually because they would be forced to pay some costs that the supplemental coverage previously took up, while 31% would see little change in their costs and 37% would experience a decrease of $250 or more in their spending.
As a result, beneficiaries would be less likely to purchase supplemental coverage plans under the proposal.
Congress is not required to accept MedPAC's proposals, but lawmakers currently are looking for ways to reduce spending, CQ HealthBeat reports (Adams, CQ HealthBeat, 6/15). Making MedPACâs recommended changes would lead to about $2.7 billion in annual savings, according to the report.
Advocates Criticize Proposal
Some advocates for Medicare beneficiaries criticized the proposal, suggesting it was a new cost burden on the elderly.
According to Judith Stein, executive director of the Center for Medicare Advocacy, "It's a bad scenario for relatively older and disabled people" (Reuters, 6/15).
The report also includes several other recommendations, including:
- Improving care coordination for dual eligibles;
- Risk adjustments for Medicare Advantage plans, rural health care providers and home infusion therapy (CQ HealthBeat, 6/15); and
- Giving HHS more flexibility to change Medicare reimbursement rates, deductibles and insurance (Sanger-Katz, National Journal, 6/15).