Payment Cuts on the Table for Medicare Managed Care
The House Ways and Means Health Subcommittee on Wednesday held a hearing to examine whether the government overpays Medicare Advantage plans, which are operated by private insurers, the Washington Times reports. Democrats have suggested that extra government payments to MA plans increase premiums and costs for all Medicare beneficiaries (Lopes, Washington Times, 3/22).
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% more 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 (American Health Line, 3/21).
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 (CongressDaily, 3/22).
According to CQ HealthBeat, subcommittee Chair Pete Stark (D-Calif.) and other Democratic lawmakers likely will support the MedPAC recommendations (CQ HealthBeat, 3/21).
At the hearing, Leslie Norwalk, acting administrator of CMS, said the higher payments for MA plans go toward added benefits, such as disease management and prevention screening, which are not provided under traditional Medicare. Norwalk noted that many of the extra payments to MA plans were mandated by Congress when they established payment floors in rural and low-income urban areas of the country.
Those payment floors -- which exceed the standard fee-for-service rate -- were designed to attract private health care providers to areas where health care options are more limited.
Subcommittee ranking member Dave Camp (R-Mich.) noted that previous attempts to cut payments to MA plans have resulted in reduced access to health care and extra benefits for seniors, particularly in rural areas. If cuts are made, "beneficiaries will lose the additional benefits and care coordination that Medicare Advantage offers," Camp said.
Stark 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 (CongressDaily, 3/22).
Stark said, "Let me be clear, we have no intention of eliminating the Medicare Advantage program," but "everything must be on the table -- doctors' payments, hospital payments, post-acute payments, drug plan payments and, yes, Medicare Advantage payments, too" (CQ HealthBeat, 3/21).
Rep. Earl Pomeroy (D-N.D.) said the extra payments to MA plans, in which 19% of Medicare beneficiaries are enrolled, give "extra benefits for a few beneficiaries." He added, "Why should we find it compelling to continue to supplement Medicare Advantage plans and their costs when those not in the plans don't get the extra benefits? Isn't there a more compelling aspect to health policy? For example, health care for children?" (CongressDaily, 3/22).