The CMS last week said it would raise its paymentsand likely the ire of federal lawmakersto the 589 health insurance plans that operate in its Medicare Advantage program.
Under a complicated formula that factors in many variables, including county rates, risk adjustments and a budget-neutrality phase-out, Medicare officials said they would boost the aged and disabled capitation rate in 2008 by 3.5 percentage points, a move that effectively increases how much the CMS pays them.
But some members of Congress would like to question the federal agency over its math.
Sen. Max Baucus (D-Mont.), chairman of the Senate Finance Committee, wants to know why there have been substantial differences in the numbers used by the CMS in its draft proposals as opposed to its final decisions.
The CMS, in an earlier estimate from last month, said it expected the Medicare Advantage growth rate to come in at 4.1%, which represents a number thats part of the overall capitation rate formula before other legislative factors are subtracted.
We take note that the CMS estimate of the MA (Medicare Advantage) growth percentage for 2008 has jumped to 5.7%1.6 percentage points higher than it was in the proposed notice, an aide to Baucus said. CMS made a similarly large revision (earlier this year), raising the growth rate to 7.1% in the final notice from 6.3%. We are not clear why this is happening, but we will be following up with CMS.
While that number does not mean that plans will necessarily get paid that much more per enrollee, it does cinch that all plans will see an increase in how much Medicare pays them, said Jean LeMasurier, director of the employer group practice at the Gorman Health Group, a consultancy.
By going with the higher number, the CMS, in effect, could be increasing how much money it pays to the privately run health plans. If thats the case, then it would be the worst possible time for it, critics charge. Plans enrolled in Medicare Advantage are routinely paid more per beneficiary than those that are enrolled in traditional Medicare. Medicare Advantage plans insure about 8 million of the 43 million Americans enrolled in Medicare, or nearly 19%.
More likely, though, is that the difference results from a data lag, LeMasurier said. CMS actuaries, she said, are bound by the data that they have at the time, and often that data can change. I wouldnt be suspicious, she said. Still, the finance committee, which has oversight of the Medicare and Medicaid programs, announced a hearing on Medicare Advantage for April 11.
A broader issue is what some members of Congress and their advisers see as a government overpayment to the private plans that contract under the program. 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. Those so-called overpayments amount to billions each year.
Rep. Pete Stark (D-Calif.), chairman of the House Ways and Means Health Subcommittee and a longtime critic of the way the CMS pays the plans, said the extra money could be used more efficiently elsewhere. Current overpayments are unsustainable and unjustifiable in light of our competing priorities, he said.
But the CMS said that even though private plans will see an upswing in payments, its still not enough to keep up with the cost of delivering care. A procedure that costs $100 in 2007, for instance, is expected to cost a little more than $104 in 2008. A CMS official, who spoke on background, said that the 3.5 percentage point rate change wont be enough to offset the expected growth in overall healthcare costs.
Enrollment in Medicare Advantage plans has increased over the years and by and large, so has beneficiaries satisfaction with them. According to a March survey by Americas Health Insurance Plans, 90% of beneficiaries expressed satisfaction with their Medicare Advantage coverage, a 6 percentage point increase over the 84% who were satisfied in a similar 2003 survey.
On Capitol Hill, lawmakers left the plans relatively unscathed in the first round of budgeting maneuversa surprise to many policy watchers who expected the program to see some cuts in order to help pay for other, mostly Democratic healthcare initiatives. But Congress has yet to deal with the issue of physician payment and the steep price tag associated with a one-year fix. Medicare Advantage plans could get a second look as a spending offset