Last year, the Government Accountability Office (GAO) released a report revealing that Medicare Advantage Private-Fee-For-Service Plans (PFFS) — which are responsible for nearly half of the recent growth in MA enrollment — have exposed beneficiaries to serious financial risks. If beneficiaries in PFFS plans did not contact their plans before obtaining services to ensure that the service was covered, they may have had to “pay for the entire cost of the service if the coverage was later denied” and PFFS plans charged exorbitant cost-sharing to beneficiaries who did not “prenotify” a plan before obtaining services.
On Monday, the Center for Medicare and Medicaid Services (CMS) released new rules that would limit some of these predatory practices. Insurers participating in the Medicare Advantage must:
– Cap out-of-pocket charges
– Have more than 10 beneficiaries or they will be eliminated
– Scale back their charges if they do not cap beneficiaries’ annual out-of-pocket costs at $3,400 or less, or if they charge beneficiaries more than traditional Medicare for services such as dialysis and home health care.
– Not charge sick, low-income beneficiaries more than what they would contribute under traditional Medicare
The administration has proposed eliminating the government’s 13-17 percent overpayments to private insurers participating in Medicare Advantage, noting that the companies are funneling the extra money into profits, and failing to improve care quality. This might encourage bloated private plans that can’t compete with Medicare to pull-out. But then, why should the federal government continue over-paying private insurers, if that same level of care could be provided at a cheaper rate?
Opening up the process to competitive bidding might require some seniors to switch policies, but only if their plan chooses not to bid or cannot provide services at the the market-driven rate. Even then, beneficiaries wouldn’t lose their Medicare benefits (they will continue to receive Medicare, albeit with some disruption as they move back to fee-for-service or find another MA plan), just the extra benefits that some Medicare Advantage plans provide.