Local View: Medicare advantage payments burden taxpayers

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By MARK INTERMILL

In an op-ed published in the July 25 Lincoln Journal Star, Bob Grundman criticized Congressional action to curb payments to Medicare Advantage plans. As Mr. Grundman pointed out, Medicare Advantage plans receive, on average, approximately 12 percent more per beneficiary than traditional Medicare.

There are several types of Medicare Advantage plans including HMOs, PPOs and private fee-for-service plans. The fastest growing type of plans, in Nebraska and nationwide, is private fee-for-service. The Medicare Payment Advisory Committee has projected that the average private fee-for-service plan payment for 2008 will be equal to 117 percent of the average cost of services provided through Medicare.

At a time when the future solvency of Medicare is in question, it doesn’t make sense to provide this degree of subsidy to Medicare Advantage plans. A 17 percent overpayment compromises the sustainability of Medicare.

The action taken by Congress fixed some of the flaws in the payment mechanism. For example, Congress corrected the potential double payment for indirect medical education. Medicare provides additional payments to teaching hospitals to cover the additional costs borne by those institutions. Those costs are factored into the rates of those facilities. As a Medicare cost, indirect medical education is also factored into the rates of Medicare Advantage plans, even though those plans do not bear the additional cost of preparing new physicians, nurses and allied professionals.

The additional payments to Medicare Advantage plans place an undue burden on taxpayers and on Medicare beneficiaries. Since the overall cost of Medicare medical services is factored into the calculation of the Part B premium, overpayments to Medicare Advantage plans inflate Part B premiums. The Medicare actuary has estimated that the overpayments add $2 per month to Part B premiums.

Congress took an important step in assuring that payments to Medicare Advantage plans will more closely resemble the cost of providing health care services through Medicare. Sen. Ben Nelson, Rep. Jeff Fortenberry and Rep. Lee Terry are to be commended for supporting legislation that will make Medicare Advantage more efficient and for voting to override the president’s veto of the bill. This bipartisan action to fix a problem that had been identified in previously enacted legislation will serve to restore confidence in Congress.

Mark Intermill is Associate State Director for Advocacy with AARP Nebraska.