Medicare payment to medicare Advantage Plans

November 24, 2008
Studies Say Private Medicare Plans Have Added Costs, for Little Gain
By ROBERT PEAR
WASHINGTON — Private health insurance plans, which serve nearly a fourth of all Medicare beneficiaries, have increased the cost and complexity of the program without any evidence of improving care, researchers say in studies to be published Monday.

The studies, questioning the value of some private plans for Medicare beneficiaries and taxpayers, were issued as President-elect Barack Obama and Congressional Democrats take aim at the plans and consider cutting the payments they receive.

Enrollment in private Medicare plans has nearly doubled in five years, to 10.1 million.

In one study, Marsha Gold, a senior fellow at Mathematica Policy Research, says that private Medicare Advantage plans “are now widely available nationwide,” even in rural areas, as Congress intended when it revamped the program in 2003.

But the study, to be published in the journal Health Affairs, says that 48 percent of the additional enrollment comes from a type of plan that mimics traditional Medicare and generally does little to coordinate care. Enrollment in these “private fee-for-service plans” has shot up to 2.3 million, from 26,000 in December 2003.

In a separate article, two analysts from the Medicare Payment Advisory Commission, Carlos Zarabozo and Scott Harrison, said that growth in private plans had driven up costs because the government pays them 13 percent more on average than what it would spend for the same beneficiaries in traditional Medicare.

The commission, an independent federal panel that advises Congress, has expressed concern about the disparity for years.

“The higher payment rates have financed what is essentially a Medicare benefit expansion for Medicare Advantage enrollees, without producing any overall savings for the Medicare program, and with increased costs borne by all beneficiaries and taxpayers,” Mr. Zarabozo and Mr. Harrison write.

The annual open enrollment period began on Nov. 15. Beneficiaries can sign up for private plans offered by companies like UnitedHealth and Humana and by many Blue Cross and Blue Shield companies.

Under the formula adopted in the 1980s, Medicare paid private plans 95 percent of the projected cost for each beneficiary in traditional Medicare, on the theory that the private plans would save money by coordinating care and being more efficient.

The private plans, which frequently offer additional benefits like vision and dental care, have proved popular. Over the years, Congress has increased payments to private plans, as an incentive to enter more markets.

Beneficiaries choose from an average of 35 private Medicare Advantage plans in each county, Mr. Zarabozo and Mr. Harrison report. But they say, “Payment increases have been so large that plans no longer need to be efficient to offer extra benefits.”

Payments to health maintenance organizations are, on average, 12 percent higher than what the government would spend for beneficiaries in traditional Medicare, they write, while payments to private fee-for-service plans were 17 percent higher.

Insurance company executives and Bush administration officials defend the role of private plans.

“Medicare Advantage plans are offering an average of over $1,100 in additional annual value to enrollees in terms of cost savings and added benefits,” said Kerry N. Weems, the acting administrator of the Centers for Medicare and Medicaid Services.

Karen M. Ignagni, president of America’s Health Insurance Plans, a trade group, said two types of plans — H.M.O.’s and preferred provider organizations — had produced tangible benefits by coordinating care. As a result, she said, disease is detected earlier and people have fewer visits to hospital emergency rooms.

But, Ms. Gold said, “these are not the types of plans that have been growing most rapidly.” Instead, the private fee-for-service plans are growing fastest, and they, she said, “are not set up to coordinate care.”

The Medicare Payment Advisory Commission has said the payments to private plans should gradually be reduced to the level of traditional Medicare.

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.

Medicare anaylis

Howard McGowan





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From: Pam Edwards
To: maldensenior@gmail.com; howard_m_02148@yahoo.com; hcmgowan@hotmail.com
Sent: Friday, November 14, 2008 12:03:59 PM
Subject: FW: new alliance calls for repeal of harmful provisions in 2003 Medicare Law



Pam Edwards, Community Organizer
Mass Senior Action Council
topamedwards@hotmail.com
781-864-2596





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From: rand@mindspring.com
Subject: new alliance calls for repeal of harmful provisions in 2003 Medicare Law
Date: Fri, 14 Nov 2008 10:48:53 -0500


A new alliance calls for repeal of harmful provisions in 2003 Medicare Law
The groups proposed six-part plan aims to reverse damage and preserve Medicare.

Read the new Alliance to Restore Medicare's "Call to Action" below and visit its website at:
http://www.alliancetorestoremedicare.org

A Call for Action:
To Restore and Ensure Medicare's Health

Background
Medicare, the federal social insurance program guaranteeing health care to older people and people with serious disabilities, has been treasured for decades by most Americans. But a law enacted five years ago is now undermining it. A multi-prong assault on Medicare is under way. It must be halted and reversed.

Developed with stealth and marketed deceptively, the so-called "Medicare Modernization Act" of 2003 (MMA) is looting Medicare's trust funds and undermining the public's confidence in Medicare as it chips away at this efficient, publicly accountable program, aiming to atomize it by gradually moving its beneficiaries into the profit oriented private insurance market.

The 1965 creation of the Medicare program was one of the most far-reaching and successful initiatives of the vision of a Great Society. By providing health care coverage to older Americans through a government-based program, the United States advanced the nation's aspiration to end poverty and promote equality. The Medicare program currently provides 43 million older adults and people with disabilities access to care and security from the costs of serious illness.

Since Medicare's creation, its foes have searched for ways to make it more profitable for private health insurance companies, even though it might thus become less secure for the people it covers. These companies see Medicare as a highly lucrative financial opportunity, not as the bedrock of reliable coverage for older Americans and people with disabilities. Actions that would undermine its social insurance principles have often been masked by the pretense of saving it.

Five years ago, these opponents of public health insurance figured out how they could ruin traditional Medicare over the course of a few years. They succeeded in turning their scheme into law in 2003 when Congress passed, and the President signed, the MMA.

A new and much needed Medicare prescription drug benefit, Medicare Part D, was the bait to win the MMA's adoption. Part D's design, however, brought into Medicare an inefficient, costly, and confusing reliance on private plans. Meanwhile, the drafters also added numerous other provisions calculated to undermine Medicare and to benefit private corporations. These provisions dramatically increased the role of private Medicare plans and provided a tremendous new source of public Medicare funds for private industry.

The attacks on the structure and inclusiveness of Medicare reflect many opponents' hostility to all public health insurance. Traditional public Medicare is seen as a threat – an example of a successful government program that might be extended to everyone. Rather than identifying and addressing the causes of medical cost inflation, opponents of traditional Medicare have actually increased costs enormously, enacting over $150 billion in overpayments to private Medicare plans. Ignoring these unnecessary, lavish expenditures, they then proceed to highlight future expenses facing Medicare and assert that such costs would make universal health care unaffordable.

But there is new hope. Recognizing that beneficiaries and doctors are more important than overpayments to private Medicare plans, Congress recently overrode a presidential veto and cut some of those overpayments. Next, Congress needs to undo all of the damaging provisions of the Medicare Modernization Act. Otherwise, the nation could still lose not only Medicare, our only national health insurance, but also the possibility for universal health coverage.

We call on the Congress and the next President to undo the MMA's damage. The accompanying appeal lists six steps vital for preserving Medicare as the successful program that brought health care to older and disabled people and for safeguarding its political viability as an essential element of the foundation for universal coverage.

We welcome other organizations to join us in this effort.

An Appeal to Congress and the President Elect: Save Medicare

To ensure that Medicare will continue to provide health care access to older Americans and people with disabilities, the Alliance to Restore Medicare asks Congress and the president elect to commit to:

Creating a prescription drug benefit entirely within the original Medicare program, without relying on private insurance. That will allow people to stay in traditional Medicare and get all their benefits there, including prescription coverage. To control costs, require Medicare to negotiate the prices it pays for drugs.

Ending the overpayments to private "Medicare Advantage" plans. These billions of dollars in subsidies come at the expense of all Medicare beneficiaries and taxpayers. Together with inflated prescription drug prices, they threaten to drain Medicare's trust funds.

Eliminating the "premium support" voucher experiment that is due to start in 2010. This experiment will force beneficiaries in at least six U.S. metropolitan areas to use a voucher to shop among coverage options, in a market where subsidized private plans compete with traditional Medicare on price. Premiums will then inevitably rise for those who opt to remain in traditional Medicare while healthier people move into cheaper private plans.

Ending the new higher-income premiums now being phased in for Part B (which covers outpatient, physician and lab services). The higher premiums can be triple the regular premium. General federal tax revenues pay three-fourths of the cost of Part B. Beneficiaries have already paid graduated income taxes throughout their working lives. Higher premiums for some will erode universal support for Medicare.

Repealing the MMA's arbitrary 45% cap on the share of Medicare costs the government is allowed to pay using general revenues. Meanwhile, reject legislation designed to implement the cap. The cap won't control costs – just shift them to beneficiaries and providers. It was intended as just another means to whittle away at Medicare.

Launching a congressional study of Medicare's long-term finances. Start by exploring why the cost of the average patient's care is rising so fast in all of U.S. health care. Look for over-pricing of goods and services, obstacles to effective coordination of care, delivery of inappropriate care and unproven treatments, payment incentives that lead providers to over-treat, and waste inherent in reliance on private insurance programs, such as Medicare Advantage and the Part D drug plans. Then propose ways to control costs and, if necessary, to adjust Medicare's financing fairly and equitably so that its financial integrity is ensured and beneficiaries get the health care they need without undue financial stress.


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REPEAL HARMFUL PROVISIONS 2003 MEDICARE LAW

From: rand@mindspring.com
Subject: new alliance calls for repeal of harmful provisions in 2003 Medicare Law
Date: Fri, 14 Nov 2008 10:48:53 -0500


A new alliance calls for repeal of harmful provisions in 2003 Medicare Law
The groups proposed six-part plan aims to reverse damage and preserve Medicare.

Read the new Alliance to Restore Medicare's "Call to Action" below and visit its website at:
http://www.alliancetorestoremedicare.org

A Call for Action:
To Restore and Ensure Medicare's Health

Background
Medicare, the federal social insurance program guaranteeing health care to older people and people with serious disabilities, has been treasured for decades by most Americans. But a law enacted five years ago is now undermining it. A multi-prong assault on Medicare is under way. It must be halted and reversed.

Developed with stealth and marketed deceptively, the so-called "Medicare Modernization Act" of 2003 (MMA) is looting Medicare's trust funds and undermining the public's confidence in Medicare as it chips away at this efficient, publicly accountable program, aiming to atomize it by gradually moving its beneficiaries into the profit oriented private insurance market.

The 1965 creation of the Medicare program was one of the most far-reaching and successful initiatives of the vision of a Great Society. By providing health care coverage to older Americans through a government-based program, the United States advanced the nation's aspiration to end poverty and promote equality. The Medicare program currently provides 43 million older adults and people with disabilities access to care and security from the costs of serious illness.

Since Medicare's creation, its foes have searched for ways to make it more profitable for private health insurance companies, even though it might thus become less secure for the people it covers. These companies see Medicare as a highly lucrative financial opportunity, not as the bedrock of reliable coverage for older Americans and people with disabilities. Actions that would undermine its social insurance principles have often been masked by the pretense of saving it.

Five years ago, these opponents of public health insurance figured out how they could ruin traditional Medicare over the course of a few years. They succeeded in turning their scheme into law in 2003 when Congress passed, and the President signed, the MMA.

A new and much needed Medicare prescription drug benefit, Medicare Part D, was the bait to win the MMA's adoption. Part D's design, however, brought into Medicare an inefficient, costly, and confusing reliance on private plans. Meanwhile, the drafters also added numerous other provisions calculated to undermine Medicare and to benefit private corporations. These provisions dramatically increased the role of private Medicare plans and provided a tremendous new source of public Medicare funds for private industry.

The attacks on the structure and inclusiveness of Medicare reflect many opponents' hostility to all public health insurance. Traditional public Medicare is seen as a threat – an example of a successful government program that might be extended to everyone. Rather than identifying and addressing the causes of medical cost inflation, opponents of traditional Medicare have actually increased costs enormously, enacting over $150 billion in overpayments to private Medicare plans. Ignoring these unnecessary, lavish expenditures, they then proceed to highlight future expenses facing Medicare and assert that such costs would make universal health care unaffordable.

But there is new hope. Recognizing that beneficiaries and doctors are more important than overpayments to private Medicare plans, Congress recently overrode a presidential veto and cut some of those overpayments. Next, Congress needs to undo all of the damaging provisions of the Medicare Modernization Act. Otherwise, the nation could still lose not only Medicare, our only national health insurance, but also the possibility for universal health coverage.

We call on the Congress and the next President to undo the MMA's damage. The accompanying appeal lists six steps vital for preserving Medicare as the successful program that brought health care to older and disabled people and for safeguarding its political viability as an essential element of the foundation for universal coverage.

We welcome other organizations to join us in this effort.

An Appeal to Congress and the President Elect: Save Medicare

To ensure that Medicare will continue to provide health care access to older Americans and people with disabilities, the Alliance to Restore Medicare asks Congress and the president elect to commit to:

Creating a prescription drug benefit entirely within the original Medicare program, without relying on private insurance. That will allow people to stay in traditional Medicare and get all their benefits there, including prescription coverage. To control costs, require Medicare to negotiate the prices it pays for drugs.

Ending the overpayments to private "Medicare Advantage" plans. These billions of dollars in subsidies come at the expense of all Medicare beneficiaries and taxpayers. Together with inflated prescription drug prices, they threaten to drain Medicare's trust funds.

Eliminating the "premium support" voucher experiment that is due to start in 2010. This experiment will force beneficiaries in at least six U.S. metropolitan areas to use a voucher to shop among coverage options, in a market where subsidized private plans compete with traditional Medicare on price. Premiums will then inevitably rise for those who opt to remain in traditional Medicare while healthier people move into cheaper private plans.

Ending the new higher-income premiums now being phased in for Part B (which covers outpatient, physician and lab services). The higher premiums can be triple the regular premium. General federal tax revenues pay three-fourths of the cost of Part B. Beneficiaries have already paid graduated income taxes throughout their working lives. Higher premiums for some will erode universal support for Medicare.

Repealing the MMA's arbitrary 45% cap on the share of Medicare costs the government is allowed to pay using general revenues. Meanwhile, reject legislation designed to implement the cap. The cap won't control costs – just shift them to beneficiaries and providers. It was intended as just another means to whittle away at Medicare.

Launching a congressional study of Medicare's long-term finances. Start by exploring why the cost of the average patient's care is rising so fast in all of U.S. health care. Look for over-pricing of goods and services, obstacles to effective coordination of care, delivery of inappropriate care and unproven treatments, payment incentives that lead providers to over-treat, and waste inherent in reliance on private insurance programs, such as Medicare Advantage and the Part D drug plans. Then propose ways to control costs and, if necessary, to adjust Medicare's financing fairly and equitably so that its financial integrity is ensured and beneficiaries get the health care they need without undue financial stress.

The fiscal year 2008 budget included over $60.5 million to fund Prescription Advantage.

This funding level for Prescription Advantage is based on Medicare Part D providing the primary prescription drug coverage for most of the program’s members and Prescription Advantage providing supplemental assistance with Part D premiums, co-payments, deductibles and coverage gaps. Prescription Advantage will continue to provide primary coverage for members not eligible for Medicare.
Please note: The legislation which funds Prescription Advantage requires the Executive Office of Elder Affairs to operate the program within its appropriation for the current fiscal year; thus, during the course of the year, the Plan may be required to impose cost containment measures”.
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