Medicare Advantage defenders decry proposed cuts

Many physicians say proposed funding cuts to the private plans are long overdue, but supporters fear cuts could cause disruptions in care.

By — Posted April 6, 2009

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Medicare Advantage, for years strongly accused by critics of receiving too much federal money, lately has become a big target for lawmakers eager to find tens of billions of dollars to offset new health spending. But Barbara S. Spivak, MD, says the private alternative to fee-for-service care works well for some beneficiaries.

Dr. Spivak, an internist in Watertown, Mass., and president of the Mount Auburn Cambridge Independent Practice Assn., sees about 3,500 patients through Tufts Medicare Preferred. She likes the flexibility and added benefits that Medicare Advantage provides her patients, and she is concerned about more widespread cuts to the program.

With Medicare Advantage, Dr. Spivak said, "we have case managers that follow our patients through the continuum. That doesn't happen in Medicare."

President Obama has proposed saving nearly $180 billion over 10 years by eliminating no-bid private Medicare plans and requiring the plans to bid competitively for government contracts, with the government paying the average of all bids. This would be in addition to payment reductions lawmakers approved last year, most of which won't start affecting the program until 2010.

Although they're not familiar with all of the details, Dr. Spivak's patients are aware that more cuts could be coming, and they also are concerned.

"We can provide services to our patients that are not available to the traditional Medicare patient," she said. "So it's not just a matter of saving money. The elderly frail patient is actually getting much better coordinated care because they're in a Medicare Advantage program."

Rick Lopez, MD, is chief physician executive at Atrius Health in Newton, Mass., an alliance of five community-based medical groups that treats about 22,000 patients enrolled in Medicare Advantage. Dr. Lopez says it's a beneficial program.

"If the cuts went through, we would have to be thinking about better ways to provide care to these patients with less resources," Dr. Lopez said. "It's going to be a smaller pie for everyone."

But critics, including major physician organizations, say the Medicare Advantage plans are greatly overpaid, which provides an unfair advantage to the plans.

The American Medical Association is one of the groups supporting equalizing private Medicare plan pay with fee-for-service pay. It says plans are getting bonuses while physician fees are facing double-digit cuts.

In addition, the increased payment to Medicare Advantage plans has created significant market distortions, and it has undermined competition by providing large subsidies at the expense of traditional Medicare, the AMA maintains. Physicians say government subsidies to Medicare Advantage go toward increasing profits for shareholders rather than providing expanded benefits.

Organizations representing Medicare patients tend to agree. Medicare Advantage costs taxpayers billions of unnecessary dollars, said Judith Stein, the Center for Medicare Advocacy's founder and executive director. "We should look instead to traditional Medicare, which balances a public program with a private claims-processing infrastructure."

Some on Capitol Hill already are sold on the idea. Obama's proposed cut is a piece of his proposal to create a $634 billion health care reserve fund to pay for expanded access to health care.

Senate Democratic leaders have expressed support for the plan and have vowed to help shepherd legislation incorporating elements of it through Congress this year.

But health plans argue that additional cuts to Medicare Advantage not only would negatively impact care for the program's nearly 11 million enrollees but also force enrollees to shoulder a disproportionate share of system reform costs.

Medicare Advantage plans provide care coordination, disease management and prevention programs for seniors, and they reward physicians for delivering quality care to patients, said Karen Ignagni, president and CEO of America's Health Insurance Plans. Reducing funding for the program could jeopardize all of those benefits.

Still, the national BlueCross BlueShield Assn. appears resigned to the prospect that some form of additional pay reductions to the private program are yet to come.

"We recognize that cuts will be made to this program, and we want to work with Congress and the administration," said Alissa Fox, senior vice president with BCBSA, which represents plans providing services to 1.6 million beneficiaries enrolled in Medicare Advantage. "We think there are ways to reform the program and make it more efficient."

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The scope of Medicare Advantage

Congress is considering cutting additional funding to Medicare Advantage plans. Nearly 11 million seniors are enrolled in this private option to the traditional fee-for-service program. Medicare Advantage has a presence in every state, but plans are not offered in every county.

Ratio of state Medicare Advantage enrollees to total state Medicare eligibles:

Less than 10%: Alaska, Delaware, Illinois, Maine, Maryland, Mississippi, New Hampshire, North Dakota, South Dakota, Vermont and Wyoming

10%-19%: Arkansas, Connecticut, District of Columbia, Georgia, Indiana, Iowa, Kansas, Kentucky, Massachusetts, Montana, Nebraska, New Jersey, North Carolina, Ohio, Oklahoma, South Carolina, Texas and Virginia

20%-29%: Alabama, Florida, Idaho, Louisiana, Michigan, Missouri, New Mexico, New York, Tennessee, Washington, West Virginia and Wisconsin

30%-39%: Arizona, California, Colorado, Hawaii, Minnesota, Nevada, Pennsylvania, Rhode Island and Utah

40%-50%: Oregon

Source: Centers for Medicare & Medicaid Services, March

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