Boiled down, Stark’s contention — based on a new Commonwealth Fund foundation study — is that the private firms are being paid 12.4 percent more per patient than government-run Medicare to provide the same level of services. In 2005, Medicare Advantage plans, originally created based on the contention that private industry could provide service for less than the government, were overpaid an average of $922 per enrollee, for a total cost to taxpayers of $5.2 billion.The payments “are not a mistake,” Stark charged. “Republicans are overpaying Medicare HMOs as part of a deliberate effort to shift beneficiaries into private plans. The Republicans’ ultimate goal is the privatization of Medicare, complete with a voucher system that leaves seniors to fend for themselves,” he added.The industry questioned the methodology of the study Stark used to make his charge and said that Medicare Advantage plans actually save money by injecting competition into the Medicare system, which covers about 43 million Americans. Figures from the America’s Health Insurance Plans trade group estimate that Medicare Advantage participants save on average $82 a month, compared to what they would pay in the traditional Medicare program. That comes to total savings of more than $6.8 billion annually, the group estimates.
And like the good politicians they are AHIP just changes the subject (See the release for a typical piece of Karen Ignagni’s tenuous relationship with the truth)..
Err, guys, it’s not whether the enrolled seniors are paying less in deductibles and co-pays that Stark is worried about. He knows that the private plans are cross-subsidizing those beneficiary costs (along with gym memberships et al) from the vast profits they’re making on them. It’s the taxpayer who’s paying more, as way too many GAO reports have shown (and now the somewhat more biased but no less true Commonwealth Fund report shows).
So the key question that the private plans need to be focusing on, especially as they are staring risk adjustment in the face anyway is, can they genuinely save money over the FFS on a non-risk selection basis by improving the efficiency and quality of the care they manage? Currently as the details of the report make clear, the risk adjustment has been hidden by an overall increase in the payments, and by the double inclusion of some other technical payments, such as the indirect amounts Medicare pays for medical education.
But surely that can’t last under any scenario. Logically in the high cost states like New York and Florida, making genuine savings over Medicare FFS—given the huge unnecessary care delivered and reported on by the Dartmouth crowd—must be achievable. Those savings should include decent profits for the private plans. They shouldn’t need extra payments to make it worth their while being in the market. If the private plans cannot prove that pretty damn quick, then they need to be prepared to get out—in a replay of the early 2000s. And Stark may want some of his (our!) money back!