Private Medicare Advantage Plans Get Extra $11.4 Billion in Government Funds for 2009

eAlert 095c9923-3972-425d-9a12-c71c7ff0fad9

Private health insurance plans serving Medicare beneficiaries will be paid $11.4 billion more in 2009 than what the same beneficiaries would have cost if covered by the traditional Medicare fee-for-service program, a new <a href="/publications/issue-briefs/2009/may/continuing-cost-privatization-extra-payments-medicare-advantage">Commonwealth Fund study</a> finds. <br /><br />The new analysis, conducted by researchers at George Washington University and the Fund, estimates that since the program was enacted in 2004, a total of $43 billion in extra payments have been made to private plans. The bulk of these extra payments were mandated by the Medicare Modernization Act of 2003, which was intended to expand the role of private plans in Medicare in an effort to reduce growth in Medicare spending. The Congressional Budget Office estimates that bringing payments to private Medicare Advantage (MA) plans in line with fee-for-service Medicare would save $157 billion over the next 10 years. <br /><br />"It is clear that private plans are continuing to substantially raise the cost of serving Medicare beneficiaries," said Commonwealth Fund president Karen Davis. "Modifying these payments in 2010 is an excellent first step, but policymakers should examine whether or not these plans are the best use of Medicare dollars for the beneficiaries they were designed to serve." <br /><br />Recent steps taken by the Centers for Medicare and Medicaid Services that reduce the payments made to private MA plans in 2010 do not address the factors responsible for the extra payments, say the authors of the study, which was led by George Washington University's Brian Biles, M.D. "We have to ask ourselves if this is the best use of our health care dollars—or if those dollars could be better spent improving Medicare benefits for all beneficiaries or expanding health insurance coverage," Biles said.