By Jane Norman, CQ HealthBeat Associate Editor
May 30, 2012 – A top Medicare official recently predicted that the private Medicare Advantage program will continue to grow at double-digit rates, although payment reductions in the program are included in the health care overhaul law.
"Despite the rhetoric you hear that the Affordable Care Act has killed the private plan side of Medicare that's contrary to the truth," deputy administrator and director of the Center for Medicare at the Center for Medicare and Medicaid Services (CMS), Jonathan Blum said. Blum was speaking at the National Medicaid Congress, a privately sponsored gathering of Medicaid professionals.
"Over the last several years the program has grown by about 10 percent a year," Blum said. "I personally predict it's going to continue to grow for the next several years at that same trend rate."
His remarks continue a trend in which Medicare officials have strongly defended the vitality and future of the program, and have sought to cement its place in Medicare policy. Republicans during the debate over the health care overhaul law (PL 111-148, PL 111-152) predicted that Medicare Advantage would wither and die because of funding cutbacks, which would be a major political problem for Democrats in states with many seniors enrolled in the program.
The private plans in the past have been paid about 13 percent more per patient than traditional fee-for-service Medicare, which critics, including the Medicare Payment Advisory Commission, viewed as too generous and detrimental to the future of Medicare. Democrats reduced the private programs' subsidies by $68 billion through 2016 under the overhaul law. About 27 percent of beneficiaries now are enrolled in the private plans.
A continuing enrollment increase over the next several years would contradict a March 2011 report by the Congressional Budget Office predicting that enrollment would peak in 2012 and then enter a sharp decline due to the cutbacks.
But enrollees, who accept managed care in return for better benefits, may be lured in by a more competitive marketplace. Medicare premiums fell by 7 percent on average this year compared with last year, probably contributing to the enrollment increases.
Blum said the program is strong and Medicare officials are working to make it equally as strong as the traditional fee-for-service plan.
"We at CMS have to believe there will be more beneficiaries in private plans in the future than there are today," he said. Blum said Medicare officials are testing ways to improve quality. That includes a demonstration project criticized by the Government Accountability Office earlier this year because it is so costly it offsets the savings from cuts in subsidies during the years it is in effect.
Medicare Advantage plans are given quality ratings of up to five stars, with five being the best. The GAO criticized the demonstration project because it extended bonuses to plans with ratings as low as three stars. But Blum said that it is an incentive to those lower-rated plans to improve to four or five stars. "We have a high degree of confidence that our quality measure, our five-star scale, is a very good measure for what quality of care is," he said.
"An overall message I want to leave folks with is CMS is not just focused on the traditional fee-for-service program for quality improvements and cost savings," he said. "We have to be focused on the private side of Medicare given that we expect to see the vast majority of growth going to that side of the program."
Like other Obama administration health care officials, Blum, in answering questions, declined to speculate on what might happen in the event the U.S. Supreme Court finds the health care overhaul law to be unconstitutional in a challenge brought by states and a small business organization. "We are operating with confidence the Supreme Court will uphold the Affordable Care Act and that's how I'm operating," he said.