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Medicare Advantage Plans Can Cost Beneficiaries More Than Traditional Medicare

Ruzanna Harutyunyan's picture

Medicare Advantage private fee-for-service plans can cost beneficiaries more out-of-pocket than the traditional fee-for-service program, according to a recent Government Accountability Office report, CQ HealthBeat reports. House Energy and Commerce Committee Chair John Dingell (D-Mich.), incoming committee Chair Henry Waxman (D-Calif.), House Energy and Commerce Health Subcommittee Chair Frank Pallone (D-N.J.), House Ways and Means Committee Chair Charles Rangel (D-N.Y.) and House Ways and Means Health Subcommittee Chair Pete Stark (D-Calif.) requested the report.

According to the Medicare Payment Advisory Commission, in 2008 Medicare paid about 17% more for beneficiaries in private fee-for-services plans than if they were in traditional Medicare fee-for-service plans (Ethridge, CQ HealthBeat, 12/15).

According to the report, administrative practices used by PFFS plans can lead to higher costs for Medicare beneficiaries (Edney, CongressDaily, 12/15). PFFS plans can charge Medicare beneficiaries for the full cost of services, whereas the fee-for-service program does not charge beneficiaries the full cost unless health care providers warn that Medicare might not cover the services, the report stated.

PFFS plans also do not have to protect Medicare beneficiaries from financial liability, a requirement that Medicare HMOs and PPOs must meet, according to the report. In addition, in the event that Medicare beneficiaries do not inform PFFS plans before they receive services, the plans can require beneficiaries to pay a large share of the cost, a possible violation of federal rules, the report stated.

In the report, CMS officials said that they have begun to examine the practices of PFFS plans and intend to take action to ensure the plans follow agency guidance. CMS officials said that they do not have data on the number of Medicare beneficiaries enrolled in PFFS plans who have higher costs as a result of the practices, according to the report.

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The report called on CMS to investigative PFFS plans that require Medicare beneficiaries to inform them before they receive services and ensure that the plans follow agency guidance.

Dingell said, "PFFS plans pose an imminent risk to the financial health of their enrollees" (CQ HealthBeat, 12/15). Waxman said, "The behavior of these plans is deeply troubling," adding, "(T)oday we learn that these plans charge Medicare beneficiaries more than three times the Medicare cost-sharing for some benefits when a beneficiary doesn't jump through obscure administrative hoops" (CongressDaily, 12/15).

More Likely To Leave

The report also found that Medicare beneficiaries are more likely to leave PFFS plans than other private Medicare plans. According to the report, 21% of Medicare beneficiaries enrolled in PFFS plans decide to leave during the year, compared with 9% of those enrolled in other private Medicare plans. The report found that Medicare beneficiaries who left PFFS plans were sicker compared with all beneficiaries enrolled in the plans, an indication that the "plans are not helpful for sick enrollees who need to use their benefits," according to CQ HealthBeat.

The report found that CMS has not disclosed the rate of Medicare beneficiaries who leave PFFS plans as required. The report called on CMS to provide Medicare beneficiaries with the information through the mail and on the agency Web site (CQ HealthBeat, 12/15).

Reprinted with permission from kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, and sign up for email delivery at kaisernetwork.org/email . The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation. © 2007 Advisory Board Company and Kaiser Family Foundation. All rights reserved.