Senators challenge proposals to cut MA rates

May 1, 2007

Despite a mounting clamor for reform from many health policy experts, Senate action to reduce payments to Medicare Advantage may be postponed this year. Influential senators oppose an across-the-board cut, which would reduce MA plan activity in rural and low-cost regions.

Despite a mounting clamor for reform from many health policy experts, Senate action to reduce payments to Medicare Advantage may be postponed this year. Influential senators oppose an across-the-board cut, which would reduce MA plan activity in rural and low-cost regions.

KEEPING CHOICES

Additionally, Committee Democrats Ron Wyden (Ore.) and Maria Cantwell (Wash.) want to ensure that any change protects states with low Medicare FFS costs that "have historically not been reimbursed in the appropriate fashion," Wyden said. Higher MA benchmarks now make it possible for HMOs in low-cost areas to support extra benefits.

Baucus noted that MA payments vary significantly across the country, based largely on differences in local FFS costs. Cutting MA rates would lead to a decline in projected MA enrollment increases, MedPAC Chairman Glenn Hackbarth said. Plans in counties paid at a floor rate, which tend to be in rural areas or urban counties with low FFS costs, would experience the largest payment and enrollment reductions, according to CBO; conversely, plans in counties with high FFS costs would see the smallest payment and enrollment reductions.

If current rates continue, CBO predicts that MA enrollment will increase rapidly in coming years to 22% of all Medicare beneficiaries by 2008 and 26% by 2017, or 15 million seniors. Equalizing payments would cut MA enrollment growth by half over 10 years, CBO estimates, and capping payments at 110% of FFS would save $32 billion and reduce enrollment proportionately.

PAY FOR QUALITY

If Medicare is to pay MA plans more than FFS, Baucus wants plans to earn those payments by doing a better job in coordinating care, improving beneficiary health and lowering healthcare costs. Grassley cited evidence that MA plans outperform traditional Medicare on a number of quality measures, such as delivery of preventive services and coordination of care. However, Hackbarth maintained that there is great variation in how well plans achieve certain quality measures.

Wyden wants to see more regional data on plan costs and rates in order to address MA payment issues responsibly and avoid any "one-size-fits-all" proposals to cut MA rates. The ultimate solution, Hackbarth noted, is to obtain more data on healthcare outcomes from all plans and providers, including Medicare FFS and private FFS plans, which now have no quality reporting requirements.

Jill Wechsler, a veteran reporter, has been covering Capitol Hill since 1994.