Seniors enrolled in private fee-for-service Medicare Advantage plans will cost the government on average 16.6% more this year than what the same enrollee would cost in traditional Medicare, amounting to $1,248 in extra payments per beneficiary and totaling more than $2.5 billion overall, according to a new Commonwealth Fund report.
Brian Biles, professor of health policy at George Washington University, said that new laws meant to rein in private fee-for-service plans may slow enrollment growth, but will do little to stop the overpayments.
The intention of the Medicare Advantage program was to save the program money through the use of private plans, Biles said in a written statement. Instead, these plans are costing Medicare billions in overpayments.
The study found that since private fee-for-service plans tend to locate in areas where Medicare Advantage payments are particularly high relative to costs in traditional Medicare, extra payments to private fee-for-service plans are 5% higher than they would be for other types of Medicare Advantage plans.
And while some suggest that PFFS plans are important because they are located in rural areas, PFFS enrollment and extra payments are heavily focused in urban areas, Biles wrote.
The Commonwealth Fund in August found that overall, Medicare Advantage plans were paid 12.4% more per enrollee than traditional Medicare, tallying more than $8.5 billion in extra payments annually. -- by Matthew DoBias