From politics to policy: A new payment approach in Medicare Advantage

Health Affairs

Volumn 27, Issue 2, 2008, Pages

  Berenson, Robert A ^a  

^a URBAN INSTITUTE   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

FINANCIAL MANAGEMENT; HEALTH CARE COST; HEALTH CARE FINANCING; HEALTH CARE POLICY; HEALTH PROGRAM; HUMAN; MEDICARE; NOTE; POLITICS; PRIVATE HEALTH INSURANCE; PROSPECTIVE PRICING;

ADVISORY COMMITTEES; BENCHMARKING; CENTERS FOR MEDICARE AND MEDICAID SERVICES (U.S.); HEALTH POLICY; HUMANS; INSURANCE, HEALTH; MEDICARE; UNITED STATES;

EID: 41749105609     PISSN: 02782715     EISSN: 02782715     Source Type: Journal    
DOI: 10.1377/hlthaff.27.2.w156     Document Type: Note

References (46)

1. R. Pear, "Democrats Press House to Expand Health Care Bill," New York Times, 23 July 2007.
2. G.D. Hackbarth, chairman, Medicare Payment Advisory Commission, "The Medicare Advantage Program and MedPAC Recommendations," Statement before the Senate Finance Committee, 11 April 2007;
3. "CMS Actuary Says Medicare Funding Warning Likely Not Needed If Managed Care Pay Cut," BNA Health Care Policy Daily, 26 April 2007;
4. T. Lieberman, "The Medicare Privatization Scam," Nation, 16 July 2007;
5. and R.A. Berenson, "Doctoring Health Care II: Yo, Democrats! Medicare Is Privatizing!" American Prospect, 7 January 2007.
6. Centers for Medicare and Medicaid Services, "Medicare Advantage in 2007" (Baltimore: CMS, April 2007);
7. America's Health Insurance Plans, "AHIP Raises Concerns about New MedPAC Report and Its Potential Impact on Beneficiaries," Press Release, 1 March 2007, http://www.ahip.org/content/pressrelease.aspx?docid=19044 (accessed 19 February 2008);
8. AHIP Center for Policy and Research, "Low Income and Minority Beneficiaries in Medicare Advantage Plans, 2004," February 2007, http://www.ahipresearch.org/PDFs/FullReportAHIPMALowIncomeandMinorityFeb2007. pdf (accessed 19 February 2008);
9. and A. Atherly and K.E. Thorpe, "The Impact of Reductions in Medicare Advantage Funding on Beneficiaries," April 2007, http://www.bcbs.com/issues/medicare/background/Medicare-Advantage.pdf (accessed 18 January 2008).
10. M. Gold, "Medicare+Choice: An Interim Report Card," Health Affairs 20, no. 4 (2001): 120-138;
11. and R.A. Berenson, "Medicare Disadvantaged and the Search for the Elusive 'Level Playing Field'," Health Affairs 23 (2004): w572-w585 (published online 15 December 2004; 10.1377/hlthaff.w4.572).
12. S.D. Pizer, R. Feldman, and A.B. Frakt, "Defective Design: Regional Competition in Medicare," Health Affairs 24 (2005): w399-w411 (published online 23 August 2005; 10.1377/hlthaff.w5.399);
13. M. Gold, "Medicare Advantage in 2006-2007: What Congress Intended?" Health Affairs 26, no. 4 (2007): w445-w455 (published online 15 May 2007; 10.1377/hlthaff.26.4.w445);
14. and Hackbarth, "The Medicare Advantage Program."
15. Medicare Payment Advisory Commission, "Update on Medicare Private Plans," chap. 4 in Report to the Congress: Medicare Payment Policy (Washington: MedPAC, March 2007).
16. Ibid.
17. MedPAC, "Reconciling Medicare+Choice Payments and Fee-for-Service Spending," chap. 7 in Report to the Congress: Medicare Payment Policy (Washington: MedPAC, March 2001). Plan payments now are based on plan bids against benchmark targets, a system that began in 2006. Plans submit bids indicating the per capita payment for which they are willing to provide Medicare Part A and Part B services. Plans also submit bids for the voluntary Part D prescription drug benefit and their required premiums for any supplemental benefits they offer. Plans are paid their bids plus 75 percent of the amount by which the applicable benchmark exceeds their bid and return the 75 percent to beneficiaries as additional benefits or as a rebate on their Part B or Part D premium. Plans that bid above the benchmark must charge enrollees the difference between the bid and benchmark as an additional premium. The effective 25 percent "tax" on bids below the benchmark explains why MedPAC estimates that benchmarks in 2006 were set 116 percent above traditional program spending and actual payments at 112 percent.
18. Berenson, "Medicare Disadvantaged."
19. C. Capps and D. Dranove, "Hospital Consolidation and Negotiated PPO Prices," Health Affairs 23, no. 2 (2004): 175-181;
20. and L.M. Nichols et al., "Are Market Forces Strong Enough to Deliver Efficient Health Care Systems? Confidence Is Waning," Health Affairs 23, no. 2 (2004): 8-21.
21. Providers do not have to accept PFFS patients, but they do not get to negotiate rates if the plan chooses to use the deeming authority to impose particular payment rates.
22. G.P. Mays, G. Claxton, and J. White, "Managed Care Rebound? Recent Changes in Health Plans' Cost Containment Strategies," Health Affairs 23 (2004): w427-w437 (published online 11 August 2004; 10.1377/hlthaff.w4.427). It is not clear, however, that the various tools used by health insurers tomanage care actually reduce cost increases.
23. D.E. Altman and L. Levitt, "The Sad History of Health Care Cost Containment as Told in One Chart," Health Affairs 21 (2002): w83-w84 (published online 23 February 2002; 10.1377/hlthaff.w2.83).
24. MedPAC, "Update on Medicare Private Plans." There is confusion in comparing the costs of MA plans with those of traditional Medicare, deriving from a failure to distinguish how much plans get paid overall - 112 percent of Medicare - and how much it costs them to provide Parts A and B services.
25. Ibid.
26. Congressional Budget Office, Designing a Premium Support System for Medicare (Washington: CBO, December 2006).
27. The CBO found that the bids plans submitted for 2006 produced similar ratios of costs to FFS spending as ACR filings produced.
28. U.S. Government Accountability Office, Federal Employees Health Benefits Program: Competition and Other Factors Linked to Wide Variation in Health Care Prices (Washington: GAO, August 2005).
29. Boards of Trustees, 2006 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Insurance Trust Fund, 1 May 2006, http://www.cms.hhs.gov/ReportsTrustFunds/downloads/tr2006. pdf (accessed 18 January 2008).
30. Dyckman and Associates, "Survey of Health Plans Concerning Physician Fees and Payment Methodology" (report prepared for MedPAC) (Washington: Dyckman and Associates, August 2003).
31. GAO, Federal Employees Health Benefits Program.
32. G.P. Mays et al., "Premium Hikes and Malpractice Insurance Disrupt Miami Health Care Market," Community Report no. 11, Summer 2003, http://www.hschange.org/CONTENT/596/596.pdf (accessed 18 January 2008).
33. CBO, Designing a Premium Support System for Medicare. Using different years' data, MedPAC and the CBO had slightly different estimates of MA costs needed to provide Part A and Part B benefits.
34. B.E. Dowd et al., "Fee-for-Service Medicare in a Competitive Environment," Health Care Financing Review 27, no. 2 (2005-2006): 113-126;
35. and T. McBride, "Disparities in Access to Medicare Managed Care Plans and Their Benefits," Health Affairs 17, no. 6 (1998): 170-180.
36. CBO, Designing a Premium Support System for Medicare.
37. Berenson, "Medicare Disadvantaged"; and Dowd et al., "Fee-for-Service Medicare."
38. L.M. Nichols and R.D. Reischauer, "Who Really Wants Price Competition in Medicare Managed Care?" Health Affairs 19, no. 5 (2000): 30-43;
39. and B. Dowd, R. Coulam, and R. Feldman, "A Tale of Four Cities: Medicare Reformand Competitive Pricing," Health Affairs 19, no. 5 (2000): 9-29.
40. B.E. Dowd, R. Feldman, and J. Christianson, Competitive Pricing for Medicare (Washington: American Enterprise Institute, 1996).
41. Dowd et al., "Fee-for-Service Medicare."
42. K. Ignagni, "Putting Principles First: A Better Way to Carry Out a Demonstration," Health Affairs 19, no. 5 (2000): 44-48.
43. CBO, Designing a Premium Support System for Medicare.
44. MedPAC, "Update on Medicare Private Plans."
45. B. Biles et al., "The Cost of Privatization: Extra Payments to Medicare Advantage Plans - Updated and Revised" (New York: Commonwealth Fund, November 2006);
46. and B. Biles and E. Adrion, "The Cost of Privatization: Extra Payments to Medicare Advantage Plans-Updated Tables for 2007" (Washington: George Washington University, 1 May 2007).