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Thursday, December 4, 2008

Where is Congressman Stark getting his facts?

A letter from Congressman Peter Starks appeared in today's New York Times that criticized private Medicare Advantage plans for providing less benefits to seniors at a higher cost. The article below details his specific concerns

Roughly 80 percent of the Medicare beneficiaries in Medicare must pay higher premiums to subsidize those who enroll in private Advantage plans. It should be noted that the private Medicare Advantage plans do not always provide more care than traditional fee for service.

The $1,100 figure quoted is an average of how much more these plans get paid per enrollee, not what is actually spent on services. In fact, many of these plans charge far more than traditional Medicare for important items like hospitalizations, home health care, durable medical equipment and chemotherapy.

Congressman Starks has been a tireless health care reformer, has had many laws named after him, and has passed some great legislation that reduces conflicts of interest in health care. I am more interested in this letter than most because I am responsible for my organization's private Medicare Advantage plan. However, if some of the details in his letter are correct, than either 1) Centers for Medicare Services (CMS) is not bothering to read any material that health plans submit them for review and approval and spend their days looking at youtube clips of animals performing improbable feats, 2) health plans are blatantly not following any of the rules that CMS clearly laid down and all of their Regulatory, Compliance and Legal staff spend their days forwarding above youtube clips to CMS employees, or 3) Congressman Starks is exaggerating details to make a political point and I am pursuing a hobby in stating the obvious.

Now when I mean exaggerating details, I mean it looks like he's found the few exceptions out of hundreds of plans. Here are the two instances where the facts don't support his assertions.

Private Medicare Advantage plans do not always provide more care than traditional fee for service.
This comment is what provided the fodder for my youtube animal jokes. When private plans present a bid to CMS, they show how much there are paying to cover the benefits of original Medicare and how much they are paying to cover additional benefits that a senior gets from the private plans. If a bid shows that a plan is paying less than original Medicare for any service, that plan's Regulatory, Compliance, or Legal department should have never signed off on it and CMS never should have accepted it. It's just the law.
Also, all the documents that explain the private plans show how much original Medicare covers and how much the private plan covers. The senior can clearly see if the private plans covers less. Now for out of network services, a private plan can cover less than original Medicare. That's because they don't have contracts with out of network providers and they want seniors to use in network providers. But otherwise, it's required that private plans cover as much as original Medicare and usually more and seniors can clearly tell when they are not by looking at the plan documents.

$1,100 figure quoted is an average of how much more these plans get paid per enrollee.
I am assuming that the $1,100 quoted is the benchmark payment that CMS pays plans per enrollee. However, from looking through the Kaiser Family Foundation website for information on benchmark payments, the highest is Florida's at $1,032. Other states are as much as hundreds of dollars lower. That number may include member premiums which can be $0-$150 typically but that still doesn't get anywhere close to an average of $1,100. Therefore, the $1,100 quoted is higher than what plans actually get paid. It could include risk adjusted payments but those are generally paid later and vary greatly depending on the health condition of the enrollee.
With regards to the comment on how this $1,100 does not include medical costs, 90% of what health plans receive typically goes towards medical costs according to the data that I review at the state quarterly financial filings. This isn't the individual market where plans can only spend 75% or even less on medical costs. The allusion that plans are able to keep the bulk of the money just doesn't happen as senior use a lot of health care.

This letter from Congressman Starks disturbs me because he is a very respected and usually very accurate voice of health care reform. Therefore, the contradictions and fact that the publicly available facts don't support his assertions worry me more than if he was known to be some hack. Either he has his facts wrong (worrisome and unlikely) or he is vastly distorting them (even more worrisome since it's more likely).

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