Home Health & Hospice Week

Recent studies cast critical light on Medicare Advantage plans. One of the Obama administration's first health care actions is widely predicted to be proposing reductions to Medicare Advantage plans' payment rates, and the result could be fewer MA patients on your rolls. Insurance companies offering MA plans profited $1.3 billion more on them in 2006 than predicted, a new Government Accountability Office report has found. In addition, "the federal government's spending on the Medicare Advantage (MA) program has grown substantially in recent years, from approximately $60 billion in 2006 and $77 billion in 2007 to an estimated $91 billion in 2008," the GAO says in the Dec. 8 report, "Medicare Advantage Organizations: Actual Expenses and Profits Com-pared to Projections for 2006" (GAO-09-132R). On average in 2006, MA plans earned profits of 6.6 percent, compared with the 4.1 percent they had projected, the GAO says. They also spent 83.3 percent of revenue on medical expenses, compared with the nearly 87 percent that was projected. "The accuracy of MA organizations' projections is important because, in addition to determining Medicare payments, these projections also affect the extent to which MA beneficiaries receive additional benefits not provided under FFS and the amounts beneficiaries pay in cost sharing and premiums," the GAO explains. "For example, if MA organizations had more accurately projected their revenues and expenses ... they would have been able to provide beneficiaries with additional benefits or cost-sharing reductions, and still maintain the level of profits projected." In comments on the report, the Centers for Medicare & Medicaid Services defends the program. "The result ... is well within the prevailing range of such differences for a one-year-ahead estimate," CMS Acting Administrator Kerry Weems says. MA organizations' higher-than-projected profits were due primarily to higher-than-projected revenues from Medicare, Weems adds. House Ways and Means Health Subcommit-tee Chair Pete Stark (D-Calif.) requested the analysis after the Medicare Payment Advisory Com-mission said Medicare spends on average 13 percent more on MA plans than traditional fee for service. The GAO report "puts to bed this idea [that] the plans are offering tremendous extra benefits with the overpayments," Stark tells the Associated Press. "The overpayments are going to profits." Another report: A separate GAO report released Dec. 15 found that beneficiaries enrolled in private fee for service (PFFS) MA plans paid higher costs for home care. For example: "One sponsor of PFFS plans increased the share of the cost for which beneficiaries were responsible from 30 percent to 70 percent if the beneficiaries did not contact the plan before obtaining certain durable [medical] equipment," the OIG says in "Characteristics, Financial Risks, and Disenrollment Rates of Beneficiaries in Private Fee-for-Service Plans" (GAO-09-25). The GAO wants CMS to "investigate the extent [...]