The ability of cost savings achieved through healthcare reform efforts to offset the coming cuts to Medicare Advantage is hotly debated at a House Ways and Means health subcommittee meeting.
A decade-long, $300 billion hit to Medicare to help fund the PPACA is coming home to roost.
The question that loomed large Thursday over a hearing before the House Ways and Means health subcommittee centered on gauging the impact of deep cuts to payments for Medicare Advantage—privately operated health insurance policies for seniors that feature value-based healthcare delivery.
Medicare provides health insurance coverage to about 54 million Americans, according to Kaiser Family Foundation. Most beneficiaries have coverage in Medicare's traditional, fee-for-service payment model, with about 15.7 million people enrolled in privately operated MA policies this year.
Everyone in the hearing room, including the four witnesses who testified before the House panel, agreed cuts are coming. But the ability of cost savings achieved through healthcare reform efforts to offset cuts to Medicare Advantage was hotly debated among lawmakers, as well as among those seated behind the witness table.
Rep. Kevin Brady (R-TX), the chairman of the health subcommittee, offered a dark view of cuts to Medicare Advantage, which several GOP members of the panel pegged at an annual average of $3,700 per MA beneficiary.
"Can these popular plans continue to be able to serve seniors?" Brady said in his opening remarks, noting MA enrollment had tripled over the past decade. "The future for Medicare Advantage may look grim."
Congress and officials at the Centers for Medicare & Medicaid Services could trigger a widespread destabilization of the MA market if they allow the Medicare cuts to accelerate in 2015, Brady said. "Millions of seniors in every area of America face cuts. We need to make sure seniors have this valuable option."
The ranking Democrat on the health subcommittee offered a far brighter view of MA than Brady's dire warnings. "There's a good story to tell about the Medicare Advantage program," Rep. Jim McDermott, (D-WA), said. "As I listen to the chairman, it's all about the scare tactics of the past."
McDermott predicted a positive financial report on the Medicare trust fund, which is expected to be released any day. Surging MA enrollment and a steady decline in MA premium rates indicate the companies operating MA health plans are on sound financial ground, he argued. "Which insurance company has gone in the tank in the past five years? Their revenue and profits continue to grow."
Dueling Witnesses
Two of the witnesses who appeared before the subcommittee mirrored the divided opinions of the lawmakers.
Robert Book, PhD, senior research director at the Washington, DC-based consultancy Health Systems Innovation Network LLC, predicted market disruptions in the form of higher premium rates, diminished benefits, or health plan withdrawals from the MA market if deep payment cuts are allowed to occur.
"Every county in the country will see [an MA] cut by 2017," Book said citing research he has conducted on the PPACA-related reimbursement cuts.
"There are more cuts to come," he said, estimating payments to MA health plans will experience a "27 percent overall cut" from the health reform-linked payment reductions. "It's going to be extremely difficult for plans to maintain Medicare Advantage benefits in the face of those cuts."
Joe Baker, president of the DC-based Medicare Rights Center, testified that MA health plans are robust enough to weather the payment-cut storm.
"The Medicare Advantage program continues to be stable and strong," he said, noting that the cost savings generated from MA's value-based healthcare delivery model have strengthened Medicare broadly. "Improved savings in the Medicare Advantage program benefits all Medicare beneficiaries."
Baker also pointed to the range of MA health plans available to Medicare-eligible Americans, noting seniors have access to an average of 18 MA health insurance policies.
The Medicare Rights Center president acknowledged that there is room for improvement in the MA program such as boosting the transparency of MA claims, and providing information to seniors that allows them to clearly see the premium and benefit design variation between MA policies. "Even with the success, Congress should take steps to improve the MA program," Baker said.
'An Attractive Option'
As is often the case in Washington politics, the truth about PPACA-related cuts to fee-for-service Medicare and Medicare Advantage probably resides somewhere in the middle ground between warnings and congratulations.
"The Medicare Advantage program has been criticized for years for reimbursing private plans at rates that are much more than what Medicare would pay to cover the same beneficiaries under traditional Medicare. So cutting back on MA payments has been an attractive option for federal policymakers for years," Paul Clark, a legal analyst at New York, NY-based Wolters Kluwer.
With about 20 percent of the Medicare cuts already enacted, he said, MA health plans appear to be financially stable under the payment ax for now. "Although there has been a lot of criticism of the ACA's MA cuts, four years after the ACA was enacted, payment cuts have been rolled out in half of all U.S. counties, and MA enrollment has continued to grow year after year," he said.
Christopher Cheney is the CMO editor at HealthLeaders.