Medicare Advantage Plans
Muddy the Water, Do Not Improve Care but Cost More, New Studies Find
Three studies in Health Affairs today question the
benefits for senior citizens from MA Plans
Nov. 24, 2008 – The private Medicare Advantage
plans have been under heavy fire from Democrats and president-elect
Barack Obama for the extra cost the government pays for them over
traditional Medicare coverage. Now, a series of three reports in
Health Affairs finds the extra cost of the MAs have provided senior
citizens more alternative ways to receive Medicare benefits, but they
have also created more complexity, while generating negligible gains in
quality.
After a year of preparation by panel, Senator’s “Call
to Action” details policy options, goals for reform; draws backing of
Center for Medicare Advocacy
The Medicare Advantage (MA) program, passed as part
of the 2003 Medicare Modernization Act (MMA), greatly expanded the
number and types of private health plans available to senior citizens.
MA plans include coordinated care plans relying on
networks of providers:
● HMOs - traditional health maintenance
organizations
● PPOs -the more loosely structured preferred provider organizations
● PFFS - private fee-for-service plans, which, like traditional
Medicare, allow access to any provider willing to accept the plans'
payment terms and conditions
● SNPs - Special Needs Plans, which are allowed to specialize in
serving beneficiaries who are also eligible for Medicaid, are
institutionalized, or have severe chronic or disabling conditions.
Most types of plans provide options for
beneficiaries to combine Medicare's coverage for prescription drugs with
traditional medical benefits.
By mid-2008, slightly more than 10 million Medicare
beneficiaries, or 23 percent of the Medicare pool, were enrolled in the
MA program or a similar private plan.
What Medicare says about MA Plans
Medicare Advantage Plans are health plan options
that are part of the Medicare program. If you join one of these plans,
you generally get all your Medicare-covered health care through that
plan. This coverage can include prescription drug coverage. Medicare
Advantage Plans include:
● Health Maintenance Organizations (HMO),
● Preferred Provider Organizations (PPO)
● Private Fee-for-Service Plans
● Medicare Special Needs Plans
● Medicare Medical Savings Account Plans (MSA)
When you join a Medicare Advantage Plan, you use
the health insurance card that you get from the plan for your health
care. In most of these plans, generally there are extra benefits and
lower copayments than in the Original Medicare Plan. However, you may
have to see doctors that belong to the plan or go to certain hospitals
to get services.
To join a Medicare Advantage Plan, you must have
Medicare Part A and Part B. You will have to pay your monthly Medicare
Part B premium to Medicare. In addition, you might have to pay a monthly
premium to your Medicare Advantage Plan for the extra benefits that they
offer.
If you join a Medicare Advantage Plan, your Medigap
policy won’t work. This means it won’t pay any deductibles, copayments,
or other cost-sharing under your Medicare Health Plan. Therefore, you
may want to drop your Medigap policy if you join a Medicare Advantage
Plan. However, you have a legal right to keep the Medigap policy.
Other Medicare Plans
The Original Medicare Plan – This is a
fee-for-service plan that covers many health care services and certain
drugs. You can go to any doctor or hospital that accepts Medicare. When
you get your health care, you use your red, white, and blue Medicare
card.
The Original Medicare Plan pays for many health
care services and supplies, but it doesn’t pay all of your health care
costs. There are costs that you must pay, like coinsurance, copayments,
and deductibles. These costs are called “gaps” in Medicare coverage. You
might want to consider buying a Medigap policy to cover these gaps in
Medicare coverage. You can also add prescription drug coverage by
joining a Medicare Prescription Drug Plan.
Medicare Prescription Drug Plans – These
stand-alone plans add prescription drug coverage to the Original
Medicare Plan, some Medicare Cost Plans, some Medicare Private
Fee-for-Service Plans and Medicare Medical Savings Account Plans.
That is nearly double the enrollment in private
plans in 2003, when 5.3 million beneficiaries were enrolled.
If expansion of enrollment in private plans was an
important goal of MMA, it clearly has been attained, says Mathematica
Policy Research senior fellow Marsha Gold, the author of one the studies
released today.
But expansion has come at a cost, as payment to
private plans has contributed to higher Medicare costs for the
government.
And the higher payment rates have financed "what is
essentially a Medicare benefit expansion for MA enrollees, without
producing any overall savings for the Medicare program," say Medicare
Payment Advisory Commission (MedPAC) analysts Carlos Zarabozo and Scott
Harrison in another study.
The data show that Medicare pays MA plans 113
percent of what expenditures would have been under the traditional
Medicare program.
In her study, Mathematica's Gold says that the
expansion in plan choice has created more administrative complexity for
the program. In 2008, the Centers for Medicare and Medicaid Services
(CMS) had to review, approve, and oversee almost 4,000 MA plans under
more than 700 different MA contracts.
"It is difficult to make the case that Medicare is
more administratively efficient because of MMA," says Gold, adding that
having so many plans competing to offer essentially the same product
adds to costs and beneficiary confusion, with the average beneficiary
asked to choose among 44 different MA plans.
Zarabozo and Harrison report that current policy
has favored growth of certain types of plans. Plans are paid
significantly more than they would have been under traditional Medicare,
and while some of these payments are used to finance extra benefits for
enrollees, the authors say that paying plans at this rate could affect
the sustainability of Medicare and result in increased costs for
taxpayers as well as beneficiaries.
PFFS are fastest growing MAs
The fastest-growing type of MA plans has been PFFS
plans, which allow beneficiaries to see any provider who will accept the
plan's payment rates. These plans made up 48 percent of the total
increase in MA enrollment after MMA's enactment in 2003. In 2006, 11
firms offered a PFFS plan; by 2008, almost 50 did.
Since these kinds of plans dominate MA's growth and
were deliberately structured to minimize effects on care delivery, Gold
says that "quality is unlikely to be better and could be worse if
provider acceptance creates access problems."
In addition, "PFFS's advantages also seem to have
made it harder for HMOs, the most tightly managed plan, to expand," she
says.
SNPs account for 24 percent of the growth in MA
enrollment. Although these plans could improve care delivery for these
vulnerable beneficiaries, Gold says that evidence to date suggests that
only a minority of SNPs are being structured to achieve these gains.
Not clear what government gets for extra money it
spends
"We spend a lot of money for the Medicare Advantage
program, and it's not clear what we get in return," Gold says. Although
plan choice has increased, mainly in rural areas, many beneficiaries
still have few local coordinated care plans (CCPs) available. Enrollment
in CCPs appears to be growing slowly. This creates an environment that
"does not favor care coordination and quality enhancement," adds Gold.
More government oversight and accountability in the
MA program are needed, she argues.
Gold says that the federal government should set
goals for the program and create a way to measure its success. This
might include an annual report from the CMS to Congress on MA program
performance using measures sufficiently detailed, targeted, and
consistent across plan types to allow diverse stakeholders to assess
their merits and contribution to Medicare's overall goals.
Sen. Max Baucus, chairman of the powerful Senate
Finance Committee, released a draft of a proposed Health care reform
bill ten days ago and said his plan would address overpayments to
private insurers in the Medicare
Advantage program.
How to level the playing field
New York Times
on the news...
“The Medicare Payment Advisory Commission has said
the payments to private plans should gradually be reduced to the level
of traditional Medicare,” according to the report in the New York Times
on today’s news at Health Affairs.
“In a campaign statement, Mr. Obama declared, ‘We
need to eliminate the excessive subsidies to Medicare Advantage plans
and pay them the same amount it would cost to treat the same patients
under regular Medicare.’ In a debate on Oct. 15, Mr. Obama described the
subsidies as ‘just a giveaway’ to private insurers.
“Similar views have been expressed by former
Senator
Tom Daschle of South Dakota, who is Mr. Obama’s choice for secretary
of health and human services. ‘Medicare’s solvency is now threatened by
overpayments to private insurers,’ Mr. Daschle said in a book published
this year.
A separate paper examines the history of private
plans under Medicare, enumerates the comparative advantages of private
plans and traditional FFS Medicare, and identifies ways to level the
playing field between traditional and private plans.
"In our view, it is past time for all members of
Congress to realize that neither traditional Medicare nor private health
plans are going away in the near future," write Robert Berenson, a
senior fellow at the Urban Institute, and Bryan Dowd, a professor at the
University of Minnesota.
They call on the new administration and Congress to
give both public and private plans the freedom to pursue strategies that
then are tested in a level-playing-field market environment.
"Allowing an inefficient Medicare program to sink
into insolvency in hopes either that beneficiaries will force higher tax
rates on their children or that the program will implode, forcing
beneficiaries into the individual private insurance market, may be
ideologically satisfying, but it is not responsible policy making," they
conclude.
Publication of the studies by Health Affairs was
supported by a grant from The Atlantic Philanthropies.
Health Affairs,
published by Project HOPE, is the leading journal of health policy. The
peer-reviewed journal appears bimonthly in print with additional
online-only papers published weekly as Health Affairs Web
Exclusives at
www.healthaffairs.org. The full text of each Health Affairs Web
Exclusive is available free of charge to all Web site visitors for a
two-week period following posting, after which it will switch to
pay-per-view for nonsubscribers. Web Exclusives are supported in part by
a grant from the Commonwealth Fund.
Keep up with the latest news for senior citizens, baby
boomers
Nov. 24, 2008 – The private Medicare Advantage
plans have been under heavy fire from Democrats and president-elect
Barack Obama for the extra cost the government pays for them over
traditional Medicare coverage. Now, a series of three reports in
Health Affairs finds the extra cost of the MAs have provided senior
citizens more alternative ways to receive Medicare benefits, but they
have also created more complexity, while generating negligible gains in
quality.