Today, the government pays Medicare Advantage plans–private health plans that contract with the federal government to offer Medicare benefits–a flat fee per member, creating a huge incentive for them to delay and deny health care services. The less money they spend, the more they profit. Healthcare Dive reports that the Medicare Payment Advisory Commission (“MedPAC”), an independent legislative agency providing Medicare policy guidance, is considering a new way to pay Medicare Advantage plans for the services they deliver to their members.
MedPAC might recommend changing the payment system to Medicare Advantage plans. But, curiously, it is not proposing to move away from an incentive system that keeps Medicare Advantage plans from designing coverage to meet the needs of people with costly conditions and encourages them to deny their members costly care. MedPac is simply proposing to pay these plans a blended rate, rather than a rate based on community health care costs.
MedPAC has not yet come up with a proposal. Its members can’t agree on how to come up with the new rate. It’s troubling that its members are not focused on a new payment model that deters these health plans from avoiding people with costly conditions and delivering high-value care to their members.
Other countries that rely on private insurers pay them a small fee to process claims. The insurers are told what to pay for and under what circumstances; prices are established by the government. So, private insurers in France and Germany have no financial incentive to delay and deny care to people with serious health care needs.
In the US, Kaiser Family Foundation reports that Medicare Advantage plans were pocketing an average of $1,608 for each member they enrolled between 2016 and 2018, of the $11,545 or so they received per member. That’s about twice as much as they profit in the individual ($779) and group markets ($855).
Many people with Medicare enroll in Medicare Advantage to save money, particularly if they are relatively healthy. But, as of 2021, if they get sick, their out-of-pocket costs could be as high as $15,100 over two months between December and January. And, they are restricted to seeing a narrow group of doctors if they want their care covered. That’s why a high proportion of them try to switch to traditional Medicare–the public Medicare health plan–when they need a lot of care; but, that can be difficult.
In contrast, the federal government has not saved money on Medicare Advantage. Over the last 16 years, Medicare Advantage has cost the government between 1.5 percent and 14 percent more than fee for service Medicare. Moreover, some Medicare Advantage plans are fraudulently overbilling the federal government billions of dollars a year. And, others are engaged in widespread and inappropriate delays and denials of care to their members.
If you want your care covered from the doctors and hospitals you know and trust, you should enroll in traditional Medicare. You will need supplemental coverage to protect yourself from high out of pocket costs. Tell your members of Congress that they should put an out-of-pocket cap in traditional Medicare.
Here’s more from Just Care:
- Ten ways Medicare Advantage plans differ from traditional Medicare
- Four things to think about when choosing between traditional Medicare and Medicare Advantage plans
- Medicare Advantage gold mine puts traditional Medicare at grave risk
- If you want easy health care access and good quality care, you probably want traditional Medicare
- Medicare Open Enrollment in 2020
