Extra Payments to Private Fee-for-Service Medicare Plans to Total $2.5 Billion in 2008

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<p>This year, private fee-for-service (PFFS) Medicare Advantage plans will be paid an average of 16.6 percent more per enrollee than what the same beneficiaries would have cost in the traditional Medicare fee-for-service program, according to a new Commonwealth Fund study.<br><br>In <a href="/publications/issue-briefs/2008/oct/medicare-advantages-private-fee-for-service-plans--paying-for-coordinated-care-without-the-coordinat
">Medicare Advantage's Private Fee-for-Service Plans: Paying for Coordinated Care Without the Coordination</a>, Brian Biles, M.D., M.P.H., professor of health policy at George Washington University, and colleagues estimate that extra payments to PFFS plans will amount to $1,248, compared to traditional fee-for-service, for each of the 2 million enrollees in PFFS plans--for a total of nearly $2.5 billion. Because the PFFS enrollees tend to live in areas where all MA payments are particularly high relative to costs in traditional Medicare, extra payments to PFFS plans average about 5 percent per enrollee than other MA plans--equivalent to $310 more per enrollee.<br><br>Although Congress made significant revisions to policies that affect how private PFFS plans operate in 2011 and thereafter, the legislation is expected to slow enrollment in PFFS plans but not stop the overpayment for each enrollee.<br><br>"If new Medicare legislation fails to address these issues, we will continue to see…Medicare spending billions of dollars that unnecessarily deplete federal resources," Biles says.</p>