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Stark: MedPAC Data Shows MA Plans Not Worth the Price

JUNE 7, 2006 -- New data from a panel that advises Congress on Medicare payment policy proves that the program continues to overpay private health care plans for the services they provide to beneficiaries, according to Rep. Pete Stark of California.

Stark, the ranking Democrat on the House Ways and Means Health Subcommittee, released new data on Tuesday from the Medicare Payment Advisory Commission (MedPAC) that found on average Medicare pays Medicare Advantage (MA) plans 11 percent more per beneficiary than for individuals enrolled in the traditional fee-for-service program.

The MedPAC analysis was prepared in response to a request from congressional committees to update past analyses. In 2004, MedPAC found the average payment to MA plans was 107 percent of the cost of demographically and geographically similar beneficiaries in the fee-for-service program.

"While working to enact the Medicare Modernization Act, Republicans crowed that adding Medicare Advantage plans to Medicare would save money through 'competition' and 'market efficiencies,'" Stark said in a statement. "It is time for Congress to enact legislation eliminating government overpayments to HMOs. MA plans should be paid the same as traditional Medicare."

Mohit Ghose, a spokesman for America's Health Insurance Plans, said Medicare Advantage plans save both beneficiaries and the Medicare program money while providing better coverage than traditional fee-for-service Medicare. According to the Centers for Medicare and Medicaid Services, more than 7 million Medicare beneficiaries are enrolled in Medicare Advantage plans.

Ghose said that MedPAC "greatly overestimates" the payment differences between Medicare Advantage and traditional Medicare. AHIP has 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.

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