MedPAC Chair Says Medicare More Efficient In Delivering Benefits Than Medicare Advantage Plans

Main Category: Medicare / Medicaid / SCHIP
Article Date: 13 Mar 2008 - 11:00 PDT

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Medicare Payment Advisory Commission Chair Glenn Hackbarth in a Tuesday hearing of the House Ways and Means Health Subcommittee said traditional Medicare is a more efficient way of delivering benefits to beneficiaries than Medicare Advantage plans, CongressDaily reports (Johnson, CongressDaily, 3/12).

Hackbarth told the panel that compared with beneficiaries in the traditional program, Medicare spends about $10 billion more annually on beneficiaries enrolled in MA plans, but there is little evidence of added benefit to justify the extra spending. MedPAC predicts MA plan payments this year will be 113% of anticipated fee-for-service spending and 117% of payments to private fee-for-service plans (Carey, CQ HealthBeat, 3/12). MedPAC has recommended eliminating the extra payment MA plans receive, a proposal supported by many Democrats but "ardently opposed" by the Bush administration and most Republicans, according to CongressDaily.

Hackbarth "took particular aim" at fee-for-service MA plans, which submit bids to the administration at more than 8% higher than the traditional Medicare rate and in some states receive payments as much as 20% higher than Medicare, CongressDaily reports. Hackbarth said, "When Medicare pays a lot more for private fee-for-service in Texas or in Michigan, a lot of that money is going to higher administrative costs. ... It's going to insurance companies" (CongressDaily, 3/12).

Lawmaker Comments
Subcommittee Chair Pete Stark (D-Calif.) said that he agreed with the MedPAC recommendations and that he would try to implement them. Senate Finance Committee Chair Max Baucus (D-Mont.) and other Democrats have proposed cuts to MA plan payments as part of Medicare legislation this spring, CQ HealthBeat reports.

Subcommittee ranking member Dave Camp (R-Mich.) said such cuts would result in 22 states not having any MA plan beneficiaries, adding that beneficiaries remaining in MA plans "would see their benefits slashed and out-of-pocket costs increase." However, Camp said, "I want to be clear that I'm not suggesting we shouldn't look at savings opportunities in the Medicare Advantage arena, including adjusting benchmarks to recognize true market forces" (CQ HealthBeat, 3/12).

Rep. Sam Johnson (R-Texas) asked whether Hackbarth thought the government was a better insurer than the private industry. Hackbarth disagreed with Johnson's statement, noting that some MA plans cost less than traditional plans and deliver higher quality care. "The problem with this payment system is we're rewarding inefficient private plans," Hackbarth said (CongressDaily, 3/12).

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