A congressional advisory panel will likely recommend a new benchmark policy for Medicare Advantage at its April meeting.
According to a presentation during a Medicare Payment Advisory Commission meeting on Thursday, the changes would adjust how CMS ties Medicare Advantage payments to fee-for-service spending, increase the rebate to at least 75% and adopt a discount rate of at least 2%. The draft recommendation would also apply earlier benchmark-related recommendations by the commission, like using geographic markets as payment areas and ending the pre-ACA cap on benchmarks.
“Plan rates are going to get cut,” said Pat Wang, a MedPAC commissioner and CEO of insurer Healthfirst.
The commission’s staff said the changes would lower Medicare spending without limiting beneficiaries’ access to plans. But beneficiaries would likely get fewer additional benefits because Medicare Advantage plans would receive lower payments from the federal government, causing those plans to cut costs. There could also be a small effect on plan participation in Medicare Advantage.
MedPAC vice-chair Paul Ginsburg said it’s clear that Medicare Advantage plans deliver Part A and B benefits at lower costs than traditional Medicare. But Medicare Advantage beneficiaries are receiving most of the cost savings in the form of supplemental benefits, which is costing the federal government and taxpayers too much money. About 14% of payments to Medicare Advantage plans go to additional benefits.
“The Medicare program is becoming extremely fiscally stressed,” Ginsburg said. That’s why it’s so important for the federal government to keep more of Medicare Advantage’s cost savings, he said.
But Wang worried that the commission’s draft report relied too heavily on Medicare Advantage’s lack of total cost savings in justifying the need for benchmark reform. She noted that the commission aims to create an efficient system, not to ensure parity between traditional Medicare and Medicare Advantage. Wang argued the commission underestimated the value of supplemental benefits in its comparison of Medicare Advantage and fee-for-service Medicare.
“I wish that we could compare things like quality and consumer satisfaction more directly between MA and fee for service,” Wang said. “Supplemental benefits are very, very valuable to people who join. The people who join MA are lower-income and non-white compared to who’s left in the fee for service system.”
But many commissioners wanted to learn more about how people use their supplemental benefits to better understand the value they provide to beneficiaries and how such benefits might address the social determinants of health.
According to MedPAC, Medicare Advantage plan bids average 87% of fee-for-service Medicare payments for inpatient and outpatient services, indicating that supplemental benefits erase whatever cost savings those plans achieve through greater efficiency.
“These extra benefits are being paid for by taxpayers, all the taxpayers,” MedPAC commissioner Marjorie Ginsburg said. “If the MA plans can figure out a way to maintain the extra benefits and still bring money back into the coffers, great. But if the extra benefits are what’s causing the total cost of MA plans to continue to be above the cost of fee for service, I think there’s a philosophical problem I have with that.”
MedPAC’s staff defended its analysis of the Medicare Advantage program, which was criticized in a blog post by America’s Health Insurance Plans last month.