Medicare Compliance & Reimbursement

Money still headed to MAs, says Prez.

President Bush's fiscal year 2005 budget proposal would provide an additional $8.3 billion for Medicare Advantage private health plans from 2006 through 2010 by slowing the move to overall risk-adjusted payments.  Since MA plans enroll a slightly healthier-than-average population, Medicare eventually expects to pay MA plans less overall as reimbursement is more heavily adjusted to account for risk.
 
After slowing the move to risk adjustment several times, policymakers had generally assumed that the government would retain savings reaped from risk-adjusting plan payments from 2006 onward. But in the fine print of this year's budget, the White House says that, instead, it will "phase in over four years the full implementation of savings from risk adjustment" - in other words, continue to return much of the money to MA plans.

The proposal drew mixed reactions from the Medicare Payment Advisory Commission March 10. The panel has repeatedly recommended that risk adjustment be applied to payments as fully and quickly as possible to ensure that Medicare offers accurate reimbursement to those who care for sicker or healthier beneficiaries.

For health plans, "risk adjustment was supposed to have been fully phased in five or six years ago," said Clinton administration Medicare chief Nancy-Ann DeParle. "My concern about all of this is that it just seems to be taking forever to get to what everyone says they agree to, which is a level playing field."

But Urban Institute President Robert Reischauer said, "I'm wondering whether we aren't beating a dead horse here." Reischauer, the commission vice-chair, warned that MedPAC could "get all carried away with our recommendation. ...We want a level playing field. Do it yesterday.
 
"But maybe what we need to do is pat the president on the back and say, 'Stick with it. Don't back off when [health plans] ... try and get you to postpone it' [again] the way they've done for the last six or seven years."