MA plans won this round but future looks bleak

Congressional Democrats tried to take a big bite out of private Medicare last week in an attempt to pay for an 18-month fix to the upcoming July 1 10.6 percent reduction in Medicare physician payments.

The effort, led by Senate Finance Chair Max Baucus (D-MT) got only 54 of the 60 votes he needed to end debate and move the issue to a floor vote. While getting that floor vote would almost have certainly meant passage of the bill in the full Congress, President Bush would have vetoed any attempt to cut the payments to private Medicare plans and the Dems would not have had the votes in either chamber to override.

Now, Baucus and Senate Finance Committee ranking member Chuck Grassley (R-IA) will have to find a more modest way of fixing the doc problem––likely for just six months. The docs are not going to suffer a Medicare payment cut this summer.

All of this was expected and is what I have been saying for months would happen.

A temporary fix to the Medicare physician payment problem (the docs
will be facing a 15 percent cut on January 1, 2009) will just shunt the
problem off to next January.

After January 20, George Bush will be
gone. Barack Obama will have no problem signing a bill with big
Medicare Advantage cuts in it. John McCain was one of only a handful of
Republican Senators who voted against the Medicare Modernization Act,
that created this version of private Medicare, in the first place.

This time, Baucus only tried to nail the private-fee-for-service (PFFS)
version by making the relatively reasonable proposal that PFFS plans
develop provider networks by 2011 in all but the most rural markets.
Since PFFS was only supposed to be a transitional product to real
network plans when it was first created in 2003, that’s hardly an
unreasonable idea. But Bush would have vetoed even that.

Next time around, with a more willing President sitting down the
street, the Democrats aren’t going to be so generous. The health
insurance industry would have been smart to take this deal. But even so
incremental a deal as this would have badly hurt the PFFS guys who have
been gaming the system with their inch-deep and a thousand-miles-wide
strategies for penetrating the private Medicare market.

Sooner or later the mainstream Medicare Advantage insurers are going to
cut the PFFS guys loose, who have been gaming this system, in order to
save what the program was supposed to be in the first place.

It’s not clear to me what Wall Street is so relieved about.

1 reply »

  1. Right now, Karen Ignani, a former Kennedy staffer, is the most effective lobbyist in Washington. She’s played a masterful hand w/ weak cards. There is no excuse for paying Medicare Advantage plans 12% per life more than the wasteful and inefficient regular Medicare program spends, and even less excuse for overpaying a merely repacked PPO network of the same ffs docs, which is what PFFS is. These subsidies are a joke, pure pork, and will end next year.