Opinion

Medicare Advantage: Wrong way to spend $54 billion

Legislation must be passed that eliminates Medicare Advantage insurer subsidies as a means to sustain access to care for all seniors.

Posted Nov. 5, 2007.

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America's seniors are about to find out that they are going to pay more and, in return, can expect less access to care.

The Centers for Medicare & Medicaid Services recently announced that next year's Medicare Part B premium will go up 3.1%. That's the smallest percentage increase in seven years, yet it's hardly a bargain. The increase is a result of payments to Medicare Advantage plans -- used by only one in five seniors -- in excess of what Medicare pays anybody else.

Meanwhile, many more seniors could well be affected by physician pay that faces a staggering cut, currently estimated at about 10% for 2008, and 15% through 2009. It's no surprise that an AMA online survey of nearly 9,000 physicians, released in June, reports that about 60% of doctors say the cut will force them into the position, at the least, of having to limit the number of new Medicare patients they take.

It is time for Congress to look at Medicare Advantage with clear eyes. Congress needs to level the playing field between traditional Medicare and private Medicare plans by eliminating excess payments to Medicare Advantage. The $54 billion saved would be more than enough to offset eliminating the two-year cut in physician reimbursement, as well as an update in payments to reflect increasing physician costs -- all while limiting premium increases for seniors.

Medicare Advantage, which covers managed care and private fee-for-service plans, was created to make Medicare more competitive and efficient, as well as to entice private plans to rural areas or to offer extra benefits. Instead, the program appears to have become more of a Medicare benefit for insurers, which on average received 112% of the amount that traditional Medicare paid for each senior's care in 2006. For private fee-for-service plans alone, that figure was 119%.

Yet despite Medicare Advantage's good fortune, it has managed to disappoint many patients and physicians. More than 50% of 2,022 physicians responding to an AMA survey on Medicare Advantage, released in May, said they have seen plans deny services typically covered in the traditional Medicare plan. More than half of physicians report receiving payments below the traditional Medicare rate.

Also, seniors are being sold plans that leave them with fewer options to cover out-of-pocket costs. For example, the plans do not allow seniors to hold Medigap policies to cover costs not paid by Medicare.

And some seniors are being sold Medicare Advantage plans through abusive marketing practices. In June, seven insurers -- including such giants as UnitedHealth Group, Humana and Coventry -- agreed to suspend marketing of Medicare Advantage fee-for-service plans, getting the clearance from the government to resume marketing only after they took steps to pay a closer watch on their sales agents. An Oct. 7 New York Times report found fee-for-service Medicare Advantage plans -- the most commonly sold plans in rural areas -- to be the most singled out for marketing abuses.

No wonder that, in the AMA survey on Medicare Advantage, physicians reported that eight of 10 patients didn't understand their plans -- and that six out of 10 physicians didn't, either.

It makes more sense to use Medicare's limited resources where they would most benefit seniors, rather than insurers. By eliminating the excess payments to Medicare Advantage plans, Congress can put the savings to good use by directing those funds in a way that will help ensure that seniors get to see the physicians they want to see, while limiting the premium they pay to see them.

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