Rep. Stark Says Private Medicare Advantage Fee-for-Service Plans at ‘Top’ of His List for Reductions in Medicare Reimbursements

The House Ways and Means Health Subcommittee on Tuesday held a hearing on private Medicare Advantage fee-for-service plans, and subcommittee Chair Pete Stark (D-Calif.) said that the plans top his list for proposed reductions in Medicare reimbursements to fund an expansion of SCHIP, CQ HealthBeat reports. Stark said, "Given that half of the projected Medicare Advantage growth" is in the area of private fee-for-service plans, "we need to immediately evaluate its value before it gets unmanageable" (Reichard, CQ HealthBeat, 5/22).

"As I've said all year, as we look to improve and protect Medicare, all provider payments must be reviewed and are subject to change," Stark said, adding, "Given what we know about PFFS at this time, they're at the top of my list." Medicare reimbursements for MA fee-for-service plans on average are 19% higher than those for traditional Medicare for equivalent benefits, and critics have said that sales agents often misrepresent the plans to enroll beneficiaries (Edney, CongressDaily, 5/23).

Testimony
At the hearing, Stark released a letter from California Medical Association President Anmol Mahal that said the group has received "hundreds of phone calls from physicians complaining that their long-standing Medicare patients had enrolled" in MA fee-for-service plans. In the letter, Mahal said that the plans "deem" physicians contracted when they agree to treat one beneficiary, although the plans do not have to inform physicians when they revise reimbursement rates.

Mahal added that Medicare beneficiaries enrolled in the plans who receive treatment from "deemed" physicians pay higher copayments and that physicians who actively agree to contract with the plans might receive lower reimbursements than those provided by traditional Medicare. Mahal said that the plans are "unwarranted profit centers for the insurance industry at the expense of patients, physicians and the taxpayers."

David Lipschutz, a staff attorney with California Health Advocates, said, "In the one-on-one marketing pitch, prospective enrollees are told, 'You can see any doctor you want,' or 'You can see any doctor that accepts Medicare.' The reality is quite different" because many beneficiaries "have had problems finding providers who are willing to accept" the conditions of and reimbursements provided by the plans.

Patricia Neuman, vice president and director of the Medicare Policy Project at the Kaiser Family Foundation, said that, although the plans cover many out-of-pocket costs not covered by traditional Medicare, some of the plans "impose daily hospital copayments, daily copayments for home health visits and daily copayments for the first several days in a skilled nursing facility." Wisconsin Insurance Commissioner Sean Dilweg said that insurance regulators in 39 states have received complaints about sales agents who misrepresent the plans to enroll Medicare beneficiaries. Blue Cross Blue Shield of Michigan Vice President Catherine Schmitt recommended against "vilifying" the plans.

CMS Testimony
Abby Block, director of the Center for Beneficiary Choices at CMS, said that MA fee-for-service plans "often locate in areas where Medicare Advantage plans have not traditionally been available," adding that the plans are the only MA plans available in some states.

Block said that the plans "also are attractive to employers and unions throughout the country because they can readily provide coverage nationwide, including coverage that is adaptable to seasonal changes in residence" (CQ HealthBeat, 5/22). Block added, "It might be a wise idea to look at performance measures, quality performance and certainly it might be a good idea to let CMS review those plans the same way we review other plans" (CongressDaily, 5/23).

AMA Survey
In related news, the American Medical Association on Tuesday released a survey in which physicians said that more than 50% of their patients who enrolled in MA plans were denied coverage for services covered by traditional Medicare. In addition, physicians said that 84% of their patients who enrolled in MA plans did not understand the plans.

According to the survey, 51% of physicians said that reimbursements provided by MA plans are lower than those provided by traditional Medicare. AMA Chair Cecil Wilson in a statement said, "The private health plans were supposed to inject competition into the Medicare program, but instead we've ended up with a federal handout to the insurance industry." Wilson said, "Eliminating the overpayments to the insurance companies will save Medicare $65 billion over five years, according to the government's own estimate," adding, "Congress has to make a choice -- preserve access to care for all seniors by stopping next year's Medicare cut to doctors or continue to help insurance companies line investors' pockets" (CQ HealthBeat, 5/22).