Medicare Compliance & Reimbursement

Commission wants MA benchmarks to line up with FFS costs.

The Medicare Payment Advisory Commission has long been a proponent of creating a level playing field between fee-for-service Medicare and Medicare Advantage private plans.
 
On April 21, MedPAC again put this viewpoint on display as commission members voted to recommend removing several perceived unfair advantages granted to MA plans in the Medicare Modernization Act.

First Act: Put Stabilization Fund Out To Pasture

The recommendations, which will be officially transmitted to Congress in MedPAC's June report, include eliminating the $10 billion "stabilization fund" intended to reward new regional preferred provider organizations for operating in areas lacking other managed care options.
 
MedPAC is also recommending setting the benchmarks against which Medicare Advantage bids will be compared - to determine the premiums owed by, or rebates due to, plan enrollees - to 100 percent of FFS costs.

Commission Also Makes MA Aggregate Decision

In addition, commissioners voted to recommend reversing the administration's decision to hold MA plans in the aggregate harmless through 2010 against "risk adjustments" that move premiums up or down based on the health status of plan enrollees. Numerous studies have found private plan enrollees to be in better health in the aggregate than FFS beneficiaries.

Will MedPAC's push for a level Medicare playing field change the playing field in Congress? Probably not any time soon, since the White House and GOP Hill leaders have big stakes in large numbers of private plans participating in Medicare.
 
However, MedPAC's recommendations could add weight to the threats of some Democratic senators to put payments to Medicare private plans on the table if Republicans insist on trying to fast-track significant Medicaid cuts through Congress using a budgetary procedure known as reconciliation instructions.

Moreover, House Ways and Means chair Bill Thomas (R-CA) has consistently made clear that he supports higher private plan payments only temporarily, and only so long as plans use them to build up infrastructure, in areas like information technology and disease management, to prepare for competition with FFS Medicare. Thomas is part Republican team player but also part rebellious policy wonk, and he could seize on the MedPAC recommendations if he believes insurers are simply pocketing the extra Medicare money.