Today, Sen. Ron Wyden (D-OR) took to the Senate floor to discuss something other than his now-infamous Choices Amendment. During a debate on Sen. Orrin Hatch’s (R-UT) motion to instruct the Senate Finance Committee to remove cuts to the Medicare Advantage program from the Senate health bill, Wyden explained that cuts wouldn’t eliminate the Medicare Advantage program; it would force insurers — many of which funnel the 13-19% over payment into profit instead of benefits — to compete on a level playing field to provide advantage benefits.
Throughout the first week of debate, Republicans have argued that the $118 billion in Medicare Advantage cuts would endanger the Medicare coverage for the 10-11 million seniors enrolled in the program. Wyden stressed that “Not all Medicare Advantage is created equal.” “Some Medicare Advantage is a model of efficiency and some of it is pretty much a rip off of both taxpayers and seniors.” The Democratic bill would force inefficient Medicare advantage plans “to follow the model of the efficient ones”:
Mr. President, my state has the highest percentage of older people in Medicare Advantage in the country…. it’s been possible to show that you can find savings in the Medicare program without harming older people, without reducing their guaranteed benefits, their essential benefits as we have learned with Medicare Advantage. The way Chairman Baucus goes about doing that is by forcing the inefficient Medicare Advantage plans to follow the model of the efficient ones.
Watch a compilation of Wyden’s remarks:
Indeed, under the legislation’s competitive bidding program — a process under which private insurers in each geographical area would bid to provide coverage to Medicare beneficiaries in a particular geographic area — Medicare Advantage plans that provide quality benefits efficiently, would receive a 5 percent bonus on top of their competitive bid to pay for extra benefits. Some Americans in low-cost states would actually gain benefits. By 2019, the Congressional Budget Office estimates that 200,000 more Americans would be enrolled in Medicare Advantage coverage.
As Senate Finance Committee staffer Shawn Bishop explained during that Committee’s mark up, “in low cost states, low fee-for-service states, today, the amount of extra benefits is very small. It’s minimal. Competitive bidding will allow good plans that coordinate care, that achieve quality rankings to earn up to 5 percent of the national average and that’s going to bring more extra benefits to low-cost states,” Bishop explained. “So it’s not accurate Senator to say all 10 million beneficiaries are going to have less extra benefits than they do today. That’s not the case there’s going to be some with more, some with less,” she concluded.
Policy makers are reducing the over payments to Medicare Advantage because they’re not resulting in better quality care. A number of government reports and independent estimates have dampened the rationale for subsidizing MA plans. The extra federal dollars don’t improve health outcomes. They pad insurers’ bottom lines, raise costs for beneficiaries in the traditional Medicare program, squeeze both Medicare and the federal budget, and drain resources from more productive uses. Private fee-for-service Medicare Advantage plans, moreover, have exposed beneficiaries to serious financial risks.
Not all Medicare Advantage is created equal. Some Medicare Advantage is a model of efficiency and some of it is pretty much a rip off of both taxpayers and seniors…Medicare Advantage was being sold door to door in her part of the country by individuals dressed up in scrubs as physicians and health care providers. And in the discussion of how to handle it, we looked at various kinds of reforms to reign in abusive practices. I came to the conclusion when you do something like that, the CEOs ought to be put in jail. And that’s what is documented on the record as it relates to the hearings held in the Senate Finance Committee….
Mr. President, my state has the highest percentage of older people in Medicare Advantage in the country. And I had an opportunity to work closely with Chairman Baucus in terms of addressing Medicare Advantage and I think with the Chairman’s leadership it’s been possible to show that you can find savings in the Medicare program without harming older people, without reducing their guaranteed benefits, their essential benefits as we have learned with Medicare Advantage. The way Chairman Baucus goes about doing that is by forcing the inefficient Medicare Advantage plans to follow the model of the efficient ones.
And the way we have been able to do that is essentially through a two part strategy. First, encourage competitive bidding and second provide incentives for quality which is done through the bonus payment provisions that are in the legislation. So first on competitive bidding, you use the planned bides to set Medicare Advantage benchmarks which would encourage the plans to compete more directly on the basis of price and quality rather than on the level of extra benefits offered to those who are enrolling. With competitive bidding, plans compete to be most efficient and hold down costs. I offered an amendment with several colleagues that would boost the payments to those plans that according to the government and the government uses a system of stars in effect to reward quality. Our amendment would boost the payment to those Medicare Advantage plans with four and five quality ratings. So in effect, with our legislation, there are both carrots and sticks. Competitive bidding plus bonus payments offered both. The plans compete to provide the best value for seniors by encouraging plans to be more efficient it’s possible to achieve significant savings for older people, help shore up the solvency of the Medicare trust fund and meet the cost saving goals of the legislation.