Federal lawmakers last week pocketed some additional ammunition in the battle over reimbursement to Medicares private fee-for-service plans.
At a Senate Finance Committee hearing, healthcare providers and policy analysts testified that the plans hold back physicians from delivering quality and cost-effective care, resulting in some practice groups having to close their doors to beneficiaries enrolled in the program.
The timing of the hearing couldnt have been better for critics of Medicare Advantages rapidly growing private fee-for-service plans. Congress is expected to continue to work on a bill that would reverse built-in Medicare pay cuts to doctors, and many members are searching for dollars to pay for such a fix. Sen. Max Baucus (D-Mont.), chairman of the committee, strongly hinted that the program could be in line for legislative reforms, which might ultimately free up billions of dollars for other initiatives.
We will consider whether we need to check their growth, and we will consider whether we can better design the law to ensure that these plans serve the needs of beneficiaries, he said.
But last year, a similar effort to do so was met with resistance from the White House. This year its not as certain that the Bush administration would take such a hard line against the plans.
In testimony before the committee, Mark Miller, executive director of the Medicare Payment Advisory Commission, said that Medicare spends 17% more on private fee-for-service plans than it does on regular Medicare. Enrollment in the private plans has rapidly increased over the past two years, too, growing from about 200,000 beneficiaries in 2005 to 1.7 million enrollees last year. The overpayments to the plans amount to about $10 billion per year, according to MedPAC data.
Executives representing providers said that the plans are hurting their bottom line. Albert Fisk, medical director at the Everett (Wash.) Clinic, said that its network of physicians loses about $7.5 million a year because of its large base of Medicare patients, a portion of which he blames on private fee-for-service plans.
Since the private fee-for-service plans were the most rapidly growing part of our Medicare business, it became clear to us that we could not afford to continue to offer care under this program, Fisk said, adding that last fall, it had informed 1,400 patients that starting next year they would not accept the plans.
While the private fee-for-service plans get more money than regular Medicare fee-for-service, doctors see none of it, Fisk said. None of the increased funding over traditional Medicare is shared with the providers, which makes it difficult for us to sustain (our) cost-savings services, he said.
The Everett Clinic isnt alone in its thinking. Sen. Chuck Grassley (R-Iowa), the senior Republican on the committee, said that a large physician group in Des Moines recently announced that it would stop admitting patients covered under private-fee-for-service plans. It took the extraordinary step because the physicians did not think the payment situation was fair, he said.
And in Mississippi, the sole provider of ambulance services to 23 of the states most rural counties went out of business, in part, because of $200,000 in unpaid Medicare Advantage claims, said Daryl Weaver, chief executive officer of 127-bed Kings Daughters Hospital in Yazoo City, Miss. For rural providers of all stripes, cash flow is a critical issue, said Weaver, who testified on behalf of the National Rural Health Association. Its not uncommon for it to take as long as a year to receive payment from Medicare Advantage plans. And this is only after multiple phone calls and e-mails from myself and my billing staff, which has increased by 25% to deal specifically with this issue over the last year.