Lawmakers Concerned That Reducing Medicare Advantage Payments Could Affect Beneficiaries’ Access to Care

Democrats and Republicans at a Senate Finance Committee meeting on Wednesday expressed concerns that Medicare Advantage plan payment reductions could affect access to care for some beneficiaries, indicating that "the chamber may take a cautious approach to reducing" the rates, CQ HealthBeat reports (Carey, CQ HealthBeat, 4/11). In March, 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% higher than reimbursements for the fee-for-service program for equivalent benefits (Kaiser Daily Health Policy Report, 3/21). Speaking at the hearing, Congressional Budget Office Director Peter Orszag said that reducing MA reimbursement rates to traditional fee-for-service levels would save $54 billion over five years and $149 billion over 10 years, beginning in 2009. However, Senate Finance Chair Max Baucus (D-Mont.) expressed concern that lowering reimbursement rates would result in many plans leaving the program, causing "mass disruptions to beneficiaries." Sen. Chuck Grassley (R-Iowa) said equalizing reimbursement rates would "undo policies ... to promote the availability of Medicare coverage choices, especially for beneficiaries in rural areas." Grassley added that equalizing MA reimbursement rates "sounds like an easy thing to do, but I don't think that's as simple as it seems." Sen. Ron Wyden (D-Ore.) said that Medicare should collect efficiency data on a regional rather than national basis to protect states such as Oregon that "have historically not been reimbursed in the appropriate fashion." Members of both parties also said MA reimbursement rates should not be cut because the plans work efficiently and improve care.

Additional Comments
MedPAC Chair Glenn Hackbarth said, "Right now, Medicare is sending the signal that they want private plans even if they cost more than fee-for-service," when the program instead should send signals that it will reward efficiency. Officials from the Center on Budget and Policy Priorities in a telephone briefing after the hearing said that the disparity between traditional Medicare and MA plans' reimbursement rates is likely to grow because of projected enrollment increases in private fee-for-service plans, which on average are reimbursed 19% more than traditional fee-for-service plans. Robert Greenstein, the center's executive director, said that lobbying by insurers to stop MA reimbursement cuts either will limit Democrats' efforts to enroll additional children in SCHIP or "blow a hole" in efforts to contain spending by offsetting new spending by reducing funds in other programs (CQ HealthBeat, 4/11).
The CBO testimony from the meeting is available online.