Federal lawmakers last week signaled that Medicare Advantage plans would come under tougher congressional scrutiny even as government officials and proponents of the private plans defended the program.
During a Feb. 13 House Ways and Means health subcommittee hearing, Chairman Pete Stark (D-Calif.) chided Medicare officials for leaving the privately operated yet government-funded plans largely unscathed in the proposed fiscal 2008 federal budget while hospitals and physicians were put on the chopping block. The budget blueprint, which was hammered out under the direction of President Bush, aims to slow the growth of Medicare spending by about $76 billion over the next five years beginning fiscal 2008.
At issue is what both Stark and the Medicare Payment Advisory Commission see as a government overpayment to the 589 private plans that contract under Medicare. Healthcare analysts have shown that Medicare Advantage plans are paid on average 12% more per beneficiary than if that same individual had been enrolled under the traditional fee-for-service Medicare program. One analyst said that in 2005 alone, those overpayments amounted to $5.2 billion in 2005.
But the trade association that represents health insurance plans has continuously said that they disagree with those numbers. Mohit Ghose, a spokesman for Americas Health Insurance Plans, said that the oft-cited MedPAC report left out specific payments made on the fee-for-service side that should have been used in the groups final assessment. Its not an apples-to-apples comparison, he said.
While its not uncommon for millions of dollars to trickle out of government agencies because of lax oversight, members of Congress on the whole, and Democrats in particular, have become much more cost-conscious lately. Thats especially true as they hunt for additional money that could be used to offset the cost of their own healthcare priorities.
AHIP, however, wants them to look elsewhere. In an environment where lawmakers continue to seek out funding mechanisms under the new paygo rules, one thing should be very clear moving forward and that is that Medicare Advantage plans not only provide better benefits and more comprehensive care, but also lower out-of-pocket costs for the approximately 8 million seniors in that program, Ghose said.
Stark has long had the Medicare Advantage program in his sights. Since its inception and subsequent refinement, the congressman has called the program a giant leap toward the privatization of Medicare, and has consistently balked at the structure the CMS uses to reimburse the plans.
Stark, backed by other Democrats on the committee, asked CMS Acting Administrator Leslie Norwalk for a detailed account of the extra benefits the plans claim to deliver, but added that he was confident they would be nowhere near the value of overpayment.
But at the hearing Norwalk defended the program, which enrolls 8.3 million of Medicares 44.6 million beneficiaries, countering that health plans under Medicare Advantage would see a $15.2 billion reduction over five years because of the proposed cuts slated for Medicare Parts A and B. The plans would also see an additional $2.3 billion loss because of previous legislative adjustments.
Medicare pays those private plans that participate a capitated rate to provide Part A and Part B benefits to enrollees, which the Congressional Budget Office projected would come to $67 billion in 2007, according to a report from the Kaiser Family Foundation.
Ghose said Medicare Advantage plans saved their enrollees $6.8 billion last year, or $82 per month per beneficiary, largely because of the competitive bidding process plans have to go through. Also, he said, plans returned $2.1 billion back to the federal government.
Meanwhile, Norwalk, in written testimony, said that the plans provide significant coverage for lower-income enrollees, adding that 57% of beneficiaries report income between $10,000 and $30,000.
John Gorman, president and chief executive officer of the Gorman Health Group consulting firm, said that calling the Medicare payment structure an overpayment is a misnomer. Gorman, who served in the Office of Managed Care under the Health Care Financing Administrationbefore it was the CMSsaid that enrollees in Medicare Advantage plans often see benefits that those enrolled under traditional fee-for-service programs dont. For instance, Medicare Advantage enrollees dont have the typical 20% co-insurance payment and they usually include vision, hearing and other coverage.
Part of the problem is ... the terms of the debate have been defined around overpayment, Gorman said. The wider perspective is that were making an investment in the kinds of infrastructure that hold the only hope in controlling the cost of chronic conditions that are killing the Medicare program.