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AARP Flexing Muscle to Remold Health Care—Including Medicare Advantage

By John Reichard, CQ HealthBeat Editor

April 2007 -- Boasting that its 38 million members are the "strongest force for improving health care in America," AARP announced Tuesday that it will use pumped-up revenues from new agreements with insurers to lobby for an overhaul of the U.S. health care system.

The new agreements—which will net AARP $4.4 billion over seven years from the insurance giants United Healthcare and Aetna—include the entry January 1 of an HMO carrying the AARP brand into the private health plan side of Medicare, Medicare Advantage.

That product will be the largest Medicare Advantage plan on its very first day in that market, totaling some one million enrollees, AARP officials said. Nevertheless, they insisted they won't drop their support for sharp payment cuts to Medicare Advantage plans totaling $54 billion over five years and $149 billion over 10 years.

That's how much the Congressional Budget Office estimates would be saved from trimming payments to Medicare Advantage plans from 112 percent of payment rates in traditional Medicare to 100 percent. AARP is on record as favoring such equalization of payment rates.

AARP said that under the new agreements, the money it takes in from United and Aetna for joint products sold to the 50 and older population will total $628 million a year, or $4.4 billion over the 2008–2014 period.

AARP is in effect trading on its reputation for delivering helpful social services to millions of older Americans to pump up the revenues of its insurer-partners—and to use funds it gets as a result from those partners to pursue a number of social aims.

The arrangement is sure to spark criticism that AARP is creating conflicts of interest that will erode the bond of trust it now enjoys with many older Americans, while exposing it to new and potent political pressures.

AARP's support for the Medicare overhaul law (PL 108-173) was key to its approval by Congress in 2003 and led to charges it was feathering its own nest because it intended to sponsor a prescription drug plan in the Part D program created by the law. Now offered for AARP by United, that plan is the largest in Part D.

But to AARP the new insurer agreements are a bold stroke to improve the quality and efficiency of treatment, expand access to affordable health care for diverse populations, and better educate consumers where to find value in the health care system.

AARP President William Novelli told reporters that over $400 million of the $628 million per year will go to fund a huge lobbying and educational campaign expanding its "Divided We Fail" campaign. Among the aims of that effort will be obtaining universal health care coverage in the U.S. and strengthening "long-term financial security," including strengthening Social Security.

At least $50 million per year—and $500 million over the next decade—will go for a second program called "AARP Health AID." The program will be free to "anyone, anytime, anywhere," who is seeking information on health care, ranging from the cost and quality of health care services to arranging for long term care services in distant cities—a frequent need among baby boomers trying to care for failing parents who live far away.

"People are frustrated when they need health information, assistance, or services quickly and they can't get a live voice on the phone or find the right site on the Web," AARP said in a fact sheet explaining the service. "This initiative will be designed to solve that problem." It will include training volunteers "to deliver local, personalized information."

AARP said it will drive its insurer-partners to improve the quality of their care by rewarding them for adhering to recommended treatment practices for conditions such as diabetes and hip fracture and penalizing them financially if they don't. It promises to publicly report the performance of the health plans and to vary its year-to-year payments to them depending on how they perform on quality measures.

"Our responsibility is to our members and society, which is why AARP will measure and continuously improve the clinical performance and efficiency of its health plans," the lobby said.

Insurers and their contracting doctors and hospitals will be pressured to reach out to underserved ethnic and minority populations and to offer services and materials available in multiple languages, AARP said.

And insurers will be required to provide easily understood materials in communicating with their members. "We will help people and their families navigate the choices of competing drugs and medical technologies by establishing simple drug and health product assessment tools," AARP said.

AARP and United currently are partners in offering health plans to supplement traditional Medicare, provide prescription drug coverage in the Medicare Part D program, and to sell coverage to Americans of ages 50 to 64. The new agreement calls for United to offer its market-leading Medicare Advantage plans under the AARP brand name, a step the lobby projects will increase the plans' current enrollment of one million members to three million members in seven years.

Aetna will offer new coverage on behalf of AARP targeting Americans of ages 50 to 64 who often struggle to find affordable coverage if they lose access to job-based health benefits. Officials said for example that Aetna will reduce the "look-back period" insurers use when asking potential customers about prior medical conditions. AARP projects that the Aetna plan will have an enrollment of several hundred thousand Americans seven years from now.

AARP's name will draw enrollees from existing Medicare Advantage plans while attracting new members from the traditional side of Medicare, said a managed care executive. But the executive questioned how widely the AARP plan could be offered if Congress slashes payments in Medicare Advantage. And in the long run AARP will expose itself to criticism from its members as its affiliated plans inevitably deny coverage or dispute the medical necessity of some services, the executive added.

One of the loudest voices in Congress warning about pressures to privatize Medicare is that of Rep. Pete Stark, but the California Democrat said in an interview that he wishes AARP "Godspeed" with its entry if its sticks to its position that Medicare Advantage and fee-for-service rates should be equal. "I'd sure rather be working with them than against them," Stark said.

But a veteran health policy analyst who cautioned that he had not yet seen the details of the plan said that it appears to create "a remarkable conflict of interest" undermining AARP's credibility in lobbying on Medicare issues. "How can you possibly claim that you bring objective views on other Medicare policies when you have a major stake" financially in Medicare Advantage, he said.

In addition, the insurer-affiliations and the money involved appear to make AARP vulnerable to threats by lawmakers that they will go after Medicare Advantage rates if the lobby doesn't agree to support their positions on given issues, the analyst said. "It makes them susceptible to being blackmailed essentially," the analyst said.

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