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Health Priorities High on AARP Agenda

By Mary Agnes Carey, CQ HealthBeat Associate Editor

February 21, 2007 -- Examining how Medicare pays physicians and managed care plans and giving the government the power to negotiate directly with drug makers as part of the Medicare drug program are all top legislative priorities for AARP, the powerful seniors' group said Wednesday.

Other health-related items on the group's 2007 advocacy agenda include backing legislation that would permit safe and legal importation of drugs from other countries, beginning with Canada; greater market access for generic drugs, including biologics; and expanding health care coverage through Medicaid and the State Children's Health Insurance Program (SCHIP).

During a news conference, AARP officials said the group would continue to oppose the creation of private accounts within Social Security and would promote measures to improve retirement savings, such as a universal payroll deduction that would allow employees to automatically contribute a portion of their wages to retirement savings accounts.

"We have a narrow window of opportunity before the 2008 presidential election heats up," said AARP Chief Executive Officer Bill Novelli. "It's really time for the tired old era of gridlock to stop."

Health care will be a key focus for the group. Concerning the Medicare drug benefit, AARP said it would seek to eliminate or significantly change an asset test used to determine if beneficiaries qualify for financial assistance.

To help control rising health care costs, AARP is urging a greater focus on areas such as disease prevention, more widespread use of health care information technology, and chronic care coordination.

AARP also urged an examination of Medicare spending on physicians and managed care plans to help protect Medicare beneficiaries from rising out-of-pocket costs.

Some lawmakers, such as Ways and Means Health Subcommittee Chairman Pete Stark, D-Calif., have said that Medicare Advantage payment rates are ripe for review. At a hearing earlier this month, Stark said he doubted that the value of added benefits such plans provide comes close to the amount of money he said the plans receive in "overpayments."

Stark also has cited data from the Medicare Payment Advisory Commission (MedPAC) finding that, on average, Medicare pays Medicare Advantage plans 11 percent more per beneficiary than it pays traditional fee-for-service programs. Health insurers have long contended that the MedPAC calculations are flawed because they do not include a variety of factors, such as the fee-for-service program's graduate medical education payments to teaching hospitals.

Citing similar studies, AARP Legislative Policy Director David Certner said reducing Medicare Advantage payments was certainly an option. Taking such a step might not necessarily drive plans from the program, said John Rother, AARP's group executive officer for policy and strategy.

Some Medicare Advantage plans are providing "very, very generous benefits" that may have to be scaled back if federal payment rates were reduced, Rother said. "We think many of the plans that offer value will stay," Rother said. "They're not going to leave the market."

Mohit Ghose, a spokesman for America's Health Insurance Plans, said some of those more generous benefits, such as low copayments or transportation services, are critical for Medicare Advantage beneficiaries and allow them to receive health care they might not otherwise.

"We believe that Medicare Advantage plans provide a very direct value for the millions of people that choose to be in them," such as lower out-of-pocket costs and more comprehensive benefits, such as hearing, vision and dental services, Ghose said.

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