Medicare Compliance & Reimbursement

Minorities contend that MA changes could cut quality of care.

In an effort to find funding for expanding the State Children's Health Insurance Program (SCHIP), legislators have identified inefficiencies in programs such as Medicare Advantage (MA), but minority advocates caution that proposed cost-saving changes to the MA program will only exacerbate current health-care disparities.

In testimony before the Senate Finance Committee, Medicare Payment Advisory Commission (MedPAC) chairman Glenn Hackbarth acknowledged the problems that plague the MA program.

"Unfortunately, MA has become a program in which there are few incentives for efficiency; although MA uses 'bidding' as the means of determining plan payments and beneficiary premiums, the bids are against benchmarks which are often legislatively set," Hackbarth testified. "Setting benchmarks well above the cost of traditional Medicare signals that the program welcomes plans that are more costly than traditional Medicare."

MA plans currently spend at 112 percent of the rate at which Medicare's more traditional fee-for-service (FFS) plans operate, Hackberth revealed--an astonishing difference that provides additional health-care options to a few at the expense of many.

"All taxpayers and all Medicare beneficiaries--not just the 18 percent of beneficiaries enrolled in private plans--are funding the payments in excess of Medicare FFS levels," Hackberth says.

The MA plan asks taxpayers to provide a select few Medicare recipients with more extensive health-care options, but more important, the additional options offered in MA plans have not demonstrated their efficacy.

"Many Medicare Advantage plans offer disease management, care coordination and preventative care programs, but little information is available on the degree to which the plans generate better health outcomes than the traditional Medicare program," explained Peter Orszag, director of the Congressional Budget Office.

Despite a lack of data demonstrating any tangible benefit received from these programs, Medicare benes have increasingly preferred MA plans to FFS plans, opting for the more-expensive plan at an alarming rate.

The MA program has experienced "unexpectedly strong growth in enrollment" throughout 2006 and in the first quarter of 2007, Orszag said in a statement. "As a result, shifts in enrollment out of the FFS program and into private plans increase net Medicare spending."

Minorities And Insurers Band Together To Fight Funding Cuts

Coming at a time when health care spending is rapidly spiraling out of control, the increase in MA spending seems an ideal opportunity to make a statement by cutting funding, but legislators have found growing resistance to MA cuts from minority advocacy groups and insurers alike.

Both the National Association for the Advancement of Colored People (NAACP) and the League of United Latin American Citizens (LULAC) expressed disapproval in letters they've sent to congressional leaders. These groups argue that cuts in MA funding will disproportionately disadvantage minorities because minorities use care-management services at a higher rate.

"Access to coordinated care and disease management services are especially critical to minorities who are more likely to suffer from common chronic health conditions, such as diabetes, asthma, respiratory disease and certain forms of cancer," argued NAACP director Hilary Shelton.

The insurance coalition represented by America's Health Insurance Plans (AHIP) also opposes MA funding cuts, presumably because eliminating optional care-management programs would also eliminate the MA plans' competitive advantage over FFS plans.

Some legislators question insurance companies' motives, however. Rep. Pete Stark (R-IA) suggested that the private participants in Medicare are "more worried about profits than patients," but AHIP president Karen Ignagni maintained that opposition to MA cuts reflects a concern for Medicare beneficiaries. "More and more members of Congress are having the opportunity to see how cuts would impact their beneficiaries," she said.

Of course, critics would argue that MA plans have not shown that care-management options benefit patients at all. "The evidence suggests that most health plans do not know how effective they are, let alone researchers," protested Debra Draper, the associate director of the Center for Studying Health System Change.

Do Insurers Target Minorities?

Unless insurance companies can prove that care-management options add value to health care, the higher costs associated with MA plans appear to cheat both beneficiaries and taxpayers alike--a problem compounded by the fact that these plans purportedly target minority groups.

"Health plans typically target enrollees that account for the largest share of costs for more intensive care-management activities ...quot; often those with chronic diseases such as asthma and diabetes or rare health conditions," said Draper. And according to the NAACP and LULAC, those conditions occur more frequently in minorities.

Essentially, then, MA care-management promoters allegedly advocate an unproven experimental program that targets minority benes and draws on public funds, which is hardly an ideal scenario.

In the words of Draper, "The question for Medicare becomes to what extent is it willing to support experimentation, and does this justify any of the extra payment to Medicare Advantage plans when plans would reap any savings?"

The answer appears to be no. "Without credible evidence on what impact they have on costs, quality and outcomes, it is difficult to justify financial support unless those providing the funding expect that the impact of health plans' care-management activities will eventually yield results that justify the investment," Draper concludes.

Just which results might eventually justify the financial disparities of MA care-management options remains unclear, but one thing remains certain: Taxpayers are spending money on care management, and no one can explain exactly why that is.