House Subcommittee To Consider Medicare Advantage Reimbursements

The House Ways and Means Health Subcommittee on Wednesday plans to consider whether Medicare overpays private Medicare Advantage plans, the AP/Arizona Republic reports. Earlier this month, the Medicare Payment Advisory Commission issued a report that found Medicare reimbursements for MA plans -- which cover extra benefits, such as vision and hearing tests and treatments -- are 12% more than reimbursements for the fee-for-service program for equivalent benefits. MedPAC recommended that Medicare reimburse MA plans at the same rate as the traditional fee-for-service program. According to the Congressional Budget Office, the move could save Medicare $65 billion over five years. Subcommittee Chair Pete Stark (D-Calif.) and other Democrats previously have said that Medicare overpays MA plans. Stark said, "Managed care plans originally came into Medicare saying they could do more for less. Now that they're in the program, they have changed their tune and are demanding we continue to overpay them to provide their services. That makes no sense." According to America's Health Insurance Plans, MA plans cover extra benefits, have lower out-of-pocket costs than the fee-for-service program and serve a large number of low-income Medicare beneficiaries and minorities. AHIP spokesperson Mohit Ghose said, "Within the beltway, it's very easy to talk about policy and numbers on a page. But when you listen to Medicare beneficiaries out in the field, as many congressmen will be doing as we head into the budget process, you will hear from them just how much relief these plans provide for them" (Perrone, AP/Arizona Republic, 3/19).

AHIP Surveys
At a press conference on Tuesday, AHIP President Karen Ignagni said that the group will provide the subcommittee with information on the number of Medicare beneficiaries enrolled in MA plans and which benefits they could lose as a result of reductions in reimbursements. According to an AHIP survey, 90% of Medicare beneficiaries enrolled in MA plans are satisfied with their plans and a majority receive extra benefits. One-third of Medicare beneficiaries enrolled in MA plans and 62% of low-income beneficiaries enrolled in such plans would avoid treatments rather than pay the higher out-of-pocket costs of the fee-for-service program, the survey found. A second AHIP survey found that three-quarters of physicians said reductions in reimbursements to MA plans would have a negative effect on Medicare beneficiaries (Reichard, CQ HealthBeat, 3/20).