by Paige Minemyer | Mar 1, 2019 5:02pm
Even as Medicare Advantage plans grab an increasing share of the
market, they’re not living up to their full potential, according to a new
report.
The Manhattan Institute, a free-market think tank, found that
MA enrollment has grown from just 6% of Medicare beneficiaries in 1990 to 36%
today. These plans enjoy bipartisan support and are growing in population as
they can negotiate and drive down costs, oftentimes more effectively than
traditional Medicare.
However, the current policy landscape is still holding these
plans back, the institute found. The report highlighted several policy reforms
that could allow MA plans to maximize their potential for lower cost and
improve patient outcomes:
- End the “tax” on
MA plan rebates.
- Develop
a baseline contract MA plans can use with providers.
- Sunset
supplemental Medicare coverage.
“Upward of a third of all senior citizens have chosen MA—and
with some modest budget-neutral reforms, many more could similarly benefit,”
the think tank’s researchers said.
The way the Centers for Medicare & Medicaid Services
develops payment rates is one of the key struggles, the report said. CMS sets a
payment benchmark that’s based on all Medicare spending in a geographic region,
including fee-for-service plans and Part B.
Payers that bid under the benchmark can earn back between 50%
and 70% of that benchmark in rebates—however, that leaves as much as 50% of
possible payments on the table, amounting to a “tax” on these plans, according
to the report.
Beneficiaries would see benefits right away from a change to
eliminate these gaps in lower out-of-pocket costs and, potentially, greater
access to dental care, according to the report.
MA plans are more popular in urban areas, so providers in
regions with limited MA uptake have no real incentive to offer the contract
concessions that these plans desire. So, establishing a baseline contract for
all providers could help ensure that MA plans are able to secure the best
prices for beneficiaries.
Supplemental coverage, according to the report, is truly the
competitor to MA plans, not traditional Medicare itself. Medicare Advantage
plans are more effective at generating cost savings than these supplemental
options, so policymakers should strongly consider nudging these plans to the
back burner.
“Although there will undoubtedly be a need for them to be
tolerated to some extent for political reasons, policymakers should embrace
every incremental opportunity to tax, nudge and regulate them out of
existence,” the researchers said.
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