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Hearing hashes out pros, cons of Medicare Advantage's growing role

Some say MA program can rescue Medicare from insolvency; others note needed improvements

At a congressional hearing about ensuring the fiscal stability of the Medicare program, experts and lawmakers discussed the role that Medicare Advantage plans have played in altering how Medicare operates--and what role they should play in the future.

House Ways and Means Health Subcommittee Chairman Pat Tiberi (R-Ohio) gave MA plans growing reviews, saying that while the program is not perfect, "its popularity and its market-based roots serve as an excellent example for needed entitlement reform" given that Medicare's current spending trajectory is unsustainable.

Katherine Baicker, Ph.D., a professor at the Harvard T.H. Chan School of Public Health, said there is evidence that Medicare Advantage plans do a better job than their fee-for-service counterparts at reducing the quantity of care by steering beneficiaries to lower-cost, higher-quality providers without harming health outcomes. To that point, a study published this week found that Medicare Advantage enrollees experience 10 percent fewer avoidable hospitalizations than fee-for-service beneficiaries.

In addition, many beneficiaries turn to Medicare Advantage plans because they provide financial protections that are missing in traditional Medicare plans, which expose beneficiaries to unlimited out-of-pocket costs, Baicker said.

But Stuart Guterman, a senior scholar in residence at nonprofit health services research organization AcademyHealth, pointed out that MA plan payments overall still exceed traditional Medicare spending in much of the country--though that relationship varies by region and by type of plan. For instance, HMOs are the only type of MA plan that have lower average costs than traditional Medicare, he said.

And because MA plans are not homogenous, policymakers should talk about the program in terms of rewarding the most efficient and effective private plans so that they can provide an appropriate counterpoint to fee-for-service, Guterman argued.

Rep. Jim McDermott (D-Wash.) also offered a more critical view of MA plans, saying that "we continue to overpay the insurance industry through the Medicare Advantage program."

Although the Affordable Care Act reduced these overpayments considerably, he said, "we have a lot of work [to do] to crack down on widespread upcoding and cherry-picking of beneficiaries."

Rep. Earl Blumenauer (D-Ore.) added that he wants to explore ways to ensure that the performance metrics the ACA created for MA plans is actually helping them improve care quality and lower costs.

"There is tremendous potential for Medicare Advantage, but we haven't tapped into it," he said. "I'm not willing to inflict a cut, but I want to get more value out of it, and we ought to be able to do a deeper dive to be able to understand it."

On the other hand, Robert E. Moffit, Ph.D., a senior fellow with the Heritage Foundation's Institute for Family Community and Opportunity, said he supports structural changes to the traditional Medicare program to make it more efficient and fiscally sustainable.

He called on policymakers to combine Medicare Part A and Part B into a single plan that includes catastrophic coverage; expand the existing policy of limiting taxypayer subsidies to the wealthiest classes of American citizens; and to gradually raise the normal retirement age of eligibility for Medicare enrollment.

To learn more:
- watch the hearing replay

Related Articles:
CBO report: Feds can't sustain Medicare spending
Medicare Advantage beneficiaries have fewer preventable hospitalizations
Medicare Advantage enrollment surges despite payment cuts