President Donald Trump’s executive order last week calling for various changes to Medicare has some experts worried that program spending and patient premiums could climb. But they cautioned that the lack of specifics in the order leaves a lot open to interpretation.
The order, titled Protecting and Improving Medicare for Our Nation’s Seniors, focuses largely on bolstering the privatized Medicare Advantage program—where one-third of beneficiaries are enrolled—while condemning Medicare for All proposals championed by some Democratic lawmakers.
In one section that’s giving experts pause, the order directs HHS to submit a report on ways to modify Medicare fee-for-service payments to more closely reflect the prices paid for services in Medicare Advantage and the commercial insurance market and encourage more competition.
Some observers argued that on its face that section seems to encourage higher spending in the traditional Medicare program. Medicare Advantage today pays hospitals and physicians roughly the same rate as traditional Medicare, while commercial plans pay much more, said Tricia Neuman, senior vice president and director of the Program on Medicare policy at the Kaiser Family Foundation.
“Some are questioning why there’s interest in increasing prices paid for services to align with the commercial market, because that would increase Medicare spending, which in turn would increase premiums and increase the financial instability of the Medicare Trust Fund,” Neuman said, though she cautioned that the section is difficult to interpret and the goal is unclear.
However, Richard Lieberman, chief data scientist at Mile High Healthcare Analytics, said Medicare Advantage plans are often able to negotiate a lower unit price than traditional Medicare. In that case, he said Medicare fee-for-service rates could be lower if they were in line with Advantage plans. But, he added, Advantage plans would “fight tooth and nail” before disclosing their fee schedules with providers.
The order also called on HHS to ensure the traditional Medicare program is not promoted or does not receive an edge over Medicare Advantage. Some advocacy organizations have long been concerned that the federal government has done the opposite by giving more attention to the Advantage program, Neuman said.
HHS Secretary Alex Azar in a media call last week said the order “commissions us to examine all practices, regulations and guidance to just make sure that we are not steering people into fee-for-service as opposed to giving them a genuine choice of Medicare Advantage or fee-for-service.”
The federal government may be looking to give seniors more help in determining whether fee-for-service or an Advantage plan offers more value, Chris Pope, senior fellow at the conservative-leaning Manhattan Institute, suggested. But he said Medicare Advantage is currently doing well and there aren’t many more levers the government could pull.
Health insurer trade associations, meanwhile, applauded the executive order for directing HHS to take administrative actions that encourage Advantage plans to offer innovative plan designs and benefits, including telehealth services and supplemental benefits not available in the fee-for-service Medicare program. The order also directs the agency to create a new payment model that adjusts Advantage supplemental benefits to allow seniors to more directly share in any cost savings that Advantage plans generate.
Correction: This article originally incorrectly stated the proportion of Medicare beneficiaries enrolled in Medicare Advantage, which is one-third.
