Extra payments to Medicare Advantage plans totaled $5.2 billion over fee-for-service costs in 2005

November 30, 2006

New York, NY, November 30, 2006--Private Medicare Advantage (MA) plans were paid an average 12.4% more per enrollee in 2005 compared with what the same enrollees would have cost in the traditional Medicare fee-for-service program, according to a new report from The Commonwealth Fund.

In the report, Brian Biles of George Washington University and colleagues estimate that extra payments to MA plans amounted to $922 over fee-for-service costs for each of about 5.6 million Medicare beneficiaries enrolled in Medicare Advantage (MA) plans, for a total of more than $5.2 billion.

The bulk of these extra payments were mandated by the Medicare Modernization Act of 2003, which were intended to expand the role of private plans in Medicare.

"Medicare should carefully examine whether extra payments to Medicare Advantage plans are the best use of dollars for the beneficiaries the program is designed to serve," said Commonwealth Fund President Karen Davis. "These payments could instead be used to provide better benefits and reduce out-of-pocket costs for seniors and the disabled."

The authors of the report, The Cost of Privatization: Extra Payments to Medicare Advantage Plans--Updated and Revised, note that eliminating extra payments to private plans could save Medicare a projected $30 billion over five years. They point out that these funds could be used to: "While encouraging enrollment in private plans was billed as a way to reduce costs for the program, Medicare Advantage in fact costs Medicare money because of the extra payments," said Biles, professor of health policy at George Washington University. "If traditional Medicare and private plans are ever to compete fairly, they need to compete on a level playing field, which would require the elimination of these extra payments."
-end-
The Commonwealth Fund is a private foundation supporting independent research on health and social issues.

Commonwealth Fund

Related Medicare Articles from Brightsurf:

Falling Medicare reimbursement rates for orthopaedic trauma
The amount Medicare reimburses for orthopaedic trauma surgery has fallen by nearly one-third over the past two decades, reports a study in the Journal of Orthopaedic Trauma.

Medicare coverage varies for transgender hormone therapies
A new study has shown substantial variability in access to guideline-recommended hormone therapies for older transgender individuals insured through Medicare.

Medicare changes may increase access to TAVR
The number of hospitals providing TAVR could double with changes to Medicare requirements.

Inequitable medicare reimbursements threaten care of most vulnerable
Hospitals, doctors and Medicare Advantage insurance plans that care for some of the most vulnerable patients are not reimbursed fairly by Medicare, according to recent findings in JAMA.

Medicare may overpay for many surgical procedures
For most surgical procedures, Medicare provides physicians a single bundled payment that covers both the procedure and related postoperative care over a period of up to 90 days.

Only 1 in 4 Medicare patients participate in cardiac rehabilitation
Only about 24% of Medicare patients who could receive outpatient cardiac rehabilitation participate in the program.

How common is food insecurity among Medicare enrollees? 
Nearly 1 in 10 Medicare enrollees age 65 and over and 4 in 10 enrollees younger than 65 with long-term disabilities experience food insecurity.

Medicare for All unlikely to cause surge in hospital use: Harvard study
Despite some analysts' claims that Medicare for All would cause a sharp increase in health care utilization, a new study finds the two biggest coverage expansions in US history -- Medicare and the ACA -- caused no net increase in hospital use.

Critical heart drug too pricey for some Medicare patients
An effective drug to treat chronic heart failure may cost too much for senior citizens with a standard Medicare Part D drug plan, said a study co-authored by a John A.

Research suggests strategy for more equitable Medicare reimbursement
Those who were enrolled in both Medicare and Medicaid were sicker, had more cognitive impairments and difficulty functioning, and needed more social support than those who were not enrolled in both government programs, Saint Louis University research found.

Read More: Medicare News and Medicare Current Events
Brightsurf.com is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com.