HEALTH PLANS: Medicare Advantage–risk adjustment is the real key

John Caroll (a fellow “Fierce” editor, not that I’m one any more) gives private Medicare plans a rather soft ride and shows that appparently it’s all looking good for Managed Medicare!"The trajectory for managed care is very good," says Mark McClellan, MD, PhD, the director of the Centers for Medicare & Medicaid Services, in an interview with Managed Care (as this story hit the presses, McClellan announced his plans to retire from CMS). He bullishly points to big gains in Medicare Advantage enrollment, new enlistees in the prescription drug plans, and bigger benefits ahead for coordinating care for the sickest beneficiaries as positive indicators of what’s to come.Medicare reform has fundamentally changed the way this market works for managed care, says McClellan, pointing to a benefit package that combines a drug benefit with preventive care incentives and the rest of the traditional benefits into "a package that Medicare Advantage plans can really excel at."


No shit Sherlock. We stick a huge extra amount in the kitty for private managed care plans, and what did we expect? However, we’ve seen this movie before and we know that a) overall this costs MORE for the system, and b) when the supernormal profits go away, so does the frothiest private sector interest. In the mean time luckily only the tax-payer/Chinese central bank gets screwed.

The question is what happens when real risk adjustment cuts in. Then we’ll see if Medicare Advantage can sustain itself and <gasp> innovate in terms of improving care delivery at a lower cost. I hope so, but put me down as a skeptic.

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