{"id":331,"date":"2013-04-02T13:58:39","date_gmt":"2013-04-02T17:58:39","guid":{"rendered":"http:\/\/www.dougsbriefcase.com\/blog\/?p=331"},"modified":"2013-04-02T15:00:06","modified_gmt":"2013-04-02T19:00:06","slug":"wh-surrenders-to-political-reality-on-private-medicare-plans040213","status":"publish","type":"post","link":"https:\/\/www.dougsbriefcase.com\/blog\/wh-surrenders-to-political-reality-on-private-medicare-plans040213\/","title":{"rendered":"WH<\/span> Surrenders to Political Reality on Private Medicare Plans"},"content":{"rendered":"

\"Photo<\/a><\/p>\n

The Oba\u00adma Admin\u00adis\u00adtra\u00adtion sur\u00adren\u00addered to polit\u00adi\u00adcal real\u00adi\u00adty yes\u00adter\u00adday, grant\u00adi\u00adng a pro\u00adgram that seniors love and that it loathes a reprieve from what would have been dev\u00adas\u00adtat\u00ading cuts.<\/p>\n

<\/p>\n

Medicare Advan\u00adtage (MA<\/span>) plans are pri\u00advate health insur\u00adance prod\u00aducts that are offered to ben\u00ade\u00adfi\u00adcia\u00adries along\u00adside tra\u00addi\u00adtion\u00adal Medicare.   Rough\u00adly one in four seniors has declined to sign up for tra\u00addi\u00adtion\u00adal Medicare cov\u00ader\u00adage, opt\u00ading instead to join an MA<\/span> plan.  The Cen\u00adters for Medicare and Med\u00adic\u00adaid Ser\u00advices (CMS<\/span>) had threat\u00adened to cut pay\u00adments to those plans by up to 10 per\u00adcent next year.  Yes\u00adter\u00adday it relent\u00aded, announc\u00ading <\/a>that it would pro\u00advide plans a pos\u00adi\u00adtive update of 3.3 percent.<\/p>\n

Democ\u00adrats gen\u00ader\u00adal\u00adly abhor the par\u00adtic\u00adi\u00adpa\u00adtion of pri\u00advate plans in Medicare.  That made MA<\/span> a juicy tar\u00adget for cuts in the health care law that the Pres\u00adi\u00addent cham\u00adpi\u00adoned.   That law requires CMS<\/span> to slash pay\u00adments to MA<\/span> plans by $308 bil\u00adlion, account\u00ading for the biggest chunk of the law\u2019s $716 bil\u00adlion in Medicare cuts.   Those cuts in gov\u00adern\u00adment sub\u00adsi\u00addies for the health care of old\u00ader Amer\u00adi\u00adcans are sup\u00adposed to off\u00adset some of the costs of pro\u00advid\u00ading sub\u00adsi\u00addized cov\u00ader\u00adage to younger low and mid\u00addle income people.<\/p>\n

Actu\u00adal\u00adly imple\u00adment\u00ading those cuts is prov\u00ading polit\u00adi\u00adcal\u00adly more tricky \u2013 par\u00adtic\u00adu\u00adlar\u00adly for Democ\u00adrats \u2014 than the White House reck\u00adoned.  The MA<\/span> cuts are espe\u00adcial\u00adly tough.  In the tra\u00addi\u00adtion\u00adal Medicare pro\u00adgram, sav\u00adings can be achieved by cut\u00adting pay\u00adments to hos\u00adpi\u00adtals, doc\u00adtors, ther\u00ada\u00adpists and oth\u00aders who pro\u00advide care to the elder\u00adly.  Seniors don\u2019t see those cuts direct\u00adly, although they will feel their effects soon\u00ader or lat\u00ader<\/a> as low pay\u00adments lead more doc\u00adtors to refuse to see Medicare patients.<\/p>\n

Cuts in pay\u00adments to MA<\/span> plans, how\u00adev\u00ader, are more direct and, con\u00adse\u00adquent\u00adly, hard\u00ader to dis\u00adguise.   That\u2019s because they are not paid direct\u00adly to hos\u00adpi\u00adtals or doc\u00adtors, but rather to the MA<\/span> plan in which a senior elects to enroll.  Because pay\u00adments to MA<\/span> plans are pre\u00admi\u00adum sub\u00adsi\u00addies, any cuts to those pay\u00adments result in pre\u00admi\u00adum increas\u00ades for enrollees.    That makes it impos\u00adsi\u00adble for politi\u00adcians to pre\u00adtend that MA<\/span> cuts don\u2019t harm seniors.<\/p>\n

Which is why, just months after enact\u00ading MA<\/span> cuts in the March 2010 health care law, the Admin\u00adis\u00adtra\u00adtion mit\u00adi\u00adgat\u00aded them in the run-up to the President\u2019s re-elec\u00adtion.  They did it by announc\u00ading a \u201cdemon\u00adstra\u00adtion pro\u00adgram\u201d esti\u00admat\u00aded to increase pay\u00adments to MA<\/span> plans by $8.35 bil\u00adlion.  The pro\u00adgram drew a rebuke from the Gen\u00ader\u00adal Account\u00adabil\u00adi\u00adty Office<\/a>,<\/span> but served its pur\u00adpose, post\u00adpon\u00ading the worst of the health law\u2019s MA<\/span> cuts until after the election.<\/p>\n

With the Pres\u00adi\u00addent safe\u00adly returned to office, CMS<\/span> announced ear\u00adli\u00ader this year that it would cut MA<\/span> pay\u00adments by 10 per\u00adcent.  There was just one prob\u00adlem: Demo\u00adc\u00adra\u00adt\u00adic Mem\u00adbers of Con\u00adgress, unlike the Pres\u00adi\u00addent, have to face the vot\u00aders again.  More than 160 Sen\u00ada\u00adtors and Rep\u00adre\u00adsen\u00adta\u00adtives, includ\u00ading all 11 Mass\u00ada\u00adchu\u00adsetts Democ\u00adrats, wrote CMS<\/span><\/a> to protest the cuts.   That cam\u00adpaign led to yesterday\u2019s announce\u00adment that the agency would pro\u00advide MA<\/span> plans with a pos\u00adi\u00adtive update.<\/p>\n

That deci\u00adsion, in my view, is the right one.  Medicare Advan\u00adtage rep\u00adre\u00adsents the best of the Medicare pro\u00adgram.  For seniors, it offers a mod\u00adern\u00adized ben\u00ade\u00adfit, one that looks a lot more like the cov\u00ader\u00adage that work\u00ading-age Amer\u00adi\u00adcans receive than the anti\u00adquat\u00aded tra\u00addi\u00adtion\u00adal Medicare ben\u00ade\u00adfit.  Seniors in MA<\/span> typ\u00adi\u00adcal\u00adly pay only $10 or $15 when they see their doc\u00adtor, as opposed to 20 per\u00adcent of the bill (after meet\u00ading a deductible of $147) under tra\u00addi\u00adtion\u00adal Medicare.  MA<\/span> plans also often offer cat\u00ada\u00adstroph\u00adic pro\u00adtec\u00adtion, cap\u00adping annu\u00adal med\u00adical expens\u00ades (e.g., a $4,000 cap on out-of-pock\u00adet spend\u00ading).  Tra\u00addi\u00adtion\u00adal Medicare offers no pro\u00adtec\u00adtion against bank\u00adrupt\u00adcy-induc\u00ading med\u00adical bills.  MA<\/span> plans, unlike tra\u00addi\u00adtion\u00adal Medicare, also typ\u00adi\u00adcal\u00adly cov\u00ader den\u00adtal and hear\u00ading ser\u00advices and many incor\u00adpo\u00adrate pre\u00adscrip\u00adtion drug cov\u00ader\u00adage, rather than requir\u00ading ben\u00ade\u00adfi\u00adcia\u00adries to pay a sep\u00ada\u00adrate pre\u00admi\u00adum to cov\u00ader their medicines.<\/p>\n

More impor\u00adtant\u00adly, MA<\/span> avoids the biggest flaw in tra\u00addi\u00adtion\u00adal Medicare: gov\u00adern\u00adment price-set\u00adting.  In MA<\/span> pri\u00advate insur\u00aders nego\u00adti\u00adate rates with hos\u00adpi\u00adtals and form net\u00adworks of pre\u00adferred providers, then com\u00adpete for cus\u00adtomers with oth\u00ader insur\u00aders over price, cov\u00ader\u00adage and qual\u00adi\u00adty.  The government\u2019s role is gen\u00ader\u00adal\u00adly  lim\u00adit\u00aded to assur\u00ading that the plans pro\u00advide required cov\u00ader\u00adage, are finan\u00adcial\u00adly sta\u00adble and charge a fair premium.<\/p>\n

In tra\u00addi\u00adtion\u00adal Medicare, gov\u00adern\u00adment uses a polit\u00adi\u00adcal and bureau\u00adcrat\u00adic process to deter\u00admine how much to pay providers for spe\u00adcif\u00adic ser\u00advices.  The process is pre\u00addictably Kafkaesque, involv\u00ading a deter\u00admi\u00adna\u00adtion of how much a unit of a doctor\u2019s time and effort should cost ($34.0203, in case you were won\u00adder\u00ading).  This \u201ccon\u00adver\u00adsion fac\u00adtor\u201d is then plugged into a clunky for\u00admu\u00adla that takes into account the resource-based rel\u00ada\u00adtive val\u00adue of each pro\u00adce\u00addure (attempt\u00ading to quan\u00adti\u00adfy the dif\u00adfer\u00adence in val\u00adue between, say, heart surgery and an annu\u00adal check\u00adup), labor costs in a par\u00adtic\u00adu\u00adlar area, rents, mal\u00adprac\u00adtice insur\u00adance and the like.  (You can find the for\u00admu\u00adla here<\/a>.)<\/p>\n

This price-set\u00adting process, in addi\u00adtion to being almost com\u00adi\u00adcal\u00adly com\u00adplex, is open to a good deal of mis\u00adchief.  Bureau\u00adcrats, politi\u00adcians, lob\u00adby\u00adists and inter\u00adest groups of var\u00adi\u00adous descrip\u00adtions all weigh in to influ\u00adence the price-set\u00adting process.  The AMA<\/span> exerts out\u00adsized con\u00adtrol over physi\u00adcian price-set\u00adting through its \u201cResource Uti\u00adliza\u00adtion Com\u00admit\u00adtees\u201d (RUCS<\/span>), which great\u00adly influ\u00adence the bureau\u00adcra\u00adcy\u2019s deci\u00adsions over how much Medicare pays for spe\u00adcif\u00adic pro\u00adce\u00addures.  The RUCS<\/span><\/a> have trig\u00adgered food fights among doc\u00adtors them\u00adselves, with pri\u00adma\u00adry care physi\u00adcians call\u00ading on the gov\u00adern\u00adment to abol\u00adish them because they alleged\u00adly favor specialists.<\/p>\n

This shit show isn\u2019t con\u00adfined to physi\u00adcian pay\u00adments, but is repli\u00adcat\u00aded in some form in vir\u00adtu\u00adal\u00adly every cat\u00ade\u00adgo\u00adry of Medicare reim\u00adburse\u00adment.  And the dis\u00adtor\u00adtions this process pro\u00adduces don\u2019t stop with Medicare.  As the gov\u00adern\u00adment tries to wring sav\u00adings out of the pro\u00adgram by squeez\u00ading reim\u00adburse\u00adment rates, doc\u00adtors and hos\u00adpi\u00adtals press for high\u00ader pay\u00adments from pri\u00advate insur\u00aders to off\u00adset their Medicare loss\u00ades.  Over time, com\u00admer\u00adcial reim\u00adburse\u00adment rates have come to be defined as mul\u00adti\u00adples of the Medicare scale, with pri\u00advate insur\u00aders pay\u00ading amounts above the Medicare rates.  And so the poi\u00adson of gov\u00adern\u00adment price-set\u00adting leech\u00ades into the pre\u00admi\u00adums you and your employ\u00ader pay for coverage.<\/p>\n

Gov\u00adern\u00adment price-set\u00adting in tra\u00addi\u00adtion\u00adal Medicare has dis\u00adtort\u00aded prices, impaired the func\u00adtion\u00ading of mar\u00adkets and dri\u00adven up pre\u00admi\u00adums for pri\u00advate insur\u00adance.  That price-set\u00adting, sad\u00adly, will con\u00adtin\u00adue, but at least the Admin\u00adis\u00adtra\u00adtion was shamed into pre\u00adserv\u00ading a degree of choice for seniors by giv\u00ading MA<\/span> one more reprieve.  At least until the next election.<\/p>\n","protected":false},"excerpt":{"rendered":"

The Oba\u00adma Admin\u00adis\u00adtra\u00adtion sur\u00adren\u00addered to polit\u00adi\u00adcal real\u00adi\u00adty yes\u00adter\u00adday, grant\u00adi\u00adng a pro\u00adgram that seniors love and that it loathes a reprieve from what would have been dev\u00adas\u00adtat\u00ading cuts. Con\u00adtin\u00adue read\u00ading \u2192<\/span><\/a><\/p>\n","protected":false},"author":3,"featured_media":330,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","wp_typography_post_enhancements_disabled":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"nfd_image_url":"","nfd_onboarding_generated":"","footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[17,16,1],"tags":[42,43,50,51,44,45,36,49,1183,48,47,52,46],"class_list":["post-331","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-entitlements","category-health-care","category-uncategorized","tag-ahip","tag-american-health-insurance-plans","tag-centers-for-medicare-and-medicaid-services","tag-cms","tag-gao","tag-general-accountability-office","tag-health-care-law","tag-ma","tag-medicare","tag-medicare-advantage","tag-obama","tag-rucs","tag-seniors"],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t