Payment policy and the growth of medicare advantage

Health Affairs

Volumn 28, Issue 1, 2009, Pages

  Zarabozo, Carlos ^a   Harrison, Scott ^b  

^a Medicare Payment Advisory Commission   (United States)

^b MedPAC ^*  (United States)

Author keywords

[No Author keywords available]

Indexed keywords

ARTICLE; COST CONTROL; HEALTH CARE ACCESS; HEALTH CARE COST; HEALTH CARE PLANNING; HEALTH CARE POLICY; HEALTH PROGRAM; LAW; MEDICARE;

MANAGED CARE PROGRAMS; MEDICARE PART C; ORGANIZATIONAL POLICY; PRIVATE SECTOR; REIMBURSEMENT MECHANISMS; UNITED STATES;

EID: 59449105154     PISSN: 02782715     EISSN: 02782715     Source Type: Journal    
DOI: 10.1377/hlthaff.28.1.w55     Document Type: Article

References (10)

1. The term plan is used to refer to a benefit package offered by a Medicare health plan. Within a given service area, one managed care company, for example, could offer multiple "plans" that varied by the level of cost sharing or the level of drug coverage. The 23 percent figure for overall penetration includes cost-reimbursed plans, which technically are not Medicare Advantage organizations and are governed by different provisions of the law. Members of cost-reimbursed plans are free to use out-of-plan providers and will have Medicare-covered services paid for by the traditional fee-for-service (FFS) program. In Exhibit 1, cost-plan enrollees are included in the FFS count. As of July 2008 there were 346,000 cost-plan enrollees, or about 0.8 percent of Medicare beneficiaries.
2. Richard Foster, chief actuary, Centers for Medicare and Medicaid Services, Testimony at hearing on the 2008 Medicare Trustees Report before the House Ways and Means Subcommittee on Health, 110th Cong., 2d sess., 1 April 2008, Serial no. 110-76, http://waysandmeans.house.gov/hearings.asp?formmode= view&id=7260 (accessed 19 August 2008).
3. Some SNP enrollees can be outside these categories as long as a disproportionate share of enrollees are special-needs individuals.
4. See Congressional Budget Office, "Congressional Budget Office Cost Estimate: H.R. 6331 Medicare Improvements for Patients and Providers Act of 2008," 23 July 2008, http://cbo.gov/ftpdocs/95xx/doc9595/hr6331pgo.pdf (accessed 19 August 2008).
5. Because plans experienced favorable selection, actual plan payments were above 95 percent of FFS costs.
6. We do not discuss medical savings account (MSA) plans in detail in this paper because they have limited enrollment (3,500 enrollees as of June 2008). We would note that with regard to payment, MSA plans receive the full difference between their premium (the equivalent of their bid) and the benchmark. For regional PPOs, which we also do not discuss in detail, there is a different method for determining benchmarks - including the use of plan bids as a component of the benchmark. See Medicare Payment Advisory Commission, "Payment Basics: Medicare Advantage Program Payment System," October 2007 http://medpac.gov/documents/MedPAC-Payment-Basics-07-MA.pdf (accessed 2 October 2008).
7. The proportion of PFFS enrollees coming from floor counties has decreased recently (from 88 percent in 2006), in part because of an increase in employer-group PFFS enrollees. Compared to other PFFS enrollees, employer-group PFFS enrollees are much less likely to be concentrated in floor counties.
8. Robert Berenson notes that Medicare HMOs are bidding below FFS levels inmany areas because the high cost of FFS is attributable to the high level of inefficiency in FFS. Thus, the efficiency of HMOs in such areas is only in relation to an inefficient FFS system. R. Berenson, "From Politics to Policy: A New Payment Approach in Medicare Advantage," Health Affairs 27, no. 2 (2008): w156-w164 (published online 4 March 2008; 10.1377/hlthaff.27.2.w156.)
9. See National Committee for Quality Assurance, The State of Health Care Quality 2007 (Washington: NCQA, September 2007);
10. and MedPAC, Report to the Congress: Medicare Payment Policy (Washington: MedPAC, March 2008).