Payments to Medicare HMOs Exceed Traditional Program’s Costs, MedPAC Report Finds
The federal government will pay Medicare private plans 7% more than it would cost to treat beneficiaries under the traditional, fee-for-service program, according to a report released Thursday by the Medicare Payment Advisory Commission, the AP/Las Vegas Sun reports. The report found that in some cases, payments to HMOs exceeded costs in traditional Medicare by more than 20%. The higher payments to private plans are related to changes under the new Medicare law. Bill Pierce, an HHS spokesperson, said that HMOs often cover preventive services and prescription drugs, which traditional Medicare will not cover until 2006. Some Democrats said that the new report "is further evidence that the Bush administration will provide incentives to help managed care plans lure seniors away from traditional Medicare by offering more services and lower premiums," the AP/Sun reports. Rep. Pete Stark (D-Calif.) said, "Time and again, objective analysis shows that HMOs and private plans cost Medicare more. The bottom line is that no private company can offer the same benefits for less than Medicare." According to the AP/Sun, HMOs say that higher payments "are a step toward stabilizing managed care plans under Medicare" and that "[s]kimpy Medicare reimbursements ... had been driving insurers from the market." While 4.6 million of Medicare beneficiaries are enrolled in HMOs, the administration anticipates that about 33% of Medicare beneficiaries will enroll over the next decade (Sherman, AP/Las Vegas Sun, 4/7).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.