Managed Care - September 2008 - (Page 24)

Messing With Medicare Advantage With Congress engineering big changes, plans are likely to face cuts unless legislators take a new approach to fixing the physician pay formula By John Carroll Contributing Editor betting that the fast growth was far from over. Analysts at the Congressional Budget Office concluded in early 2008 that more than 4 million more Americans — drawn by sweetened benefits made possible by federal subsidies — would sign up over the next five years. Reviewing the swelling wave of enrollment in Medicare Advantage last year to a Senate committee, Karen Ignagni, the head of America’s Health Insurance Plans, pointed to new coordinated care initiatives, disease management programs, and lower out-of-pocket expenses for beneficiaries as achievements that have won high marks for the over-65 members in these plans. Democratic leaders in the House, though, have S oon after the Bush administration and Republican members of Congress combined to create Medicare Advantage, the private approach proved to be a solid success with beneficiaries and with the health plans that offered them coverage. In the five years since enactment of the Medicare Modernization Act of 2003, 9.6 million people signed on to the private plans — more than 20 percent of the eligible population. About a quarter of those MA members now are in private fee-forservice (PFFS) plans. The smart money had been Medicare Advantage enrollment to slow The new legislation is likely to slow the increase in MA plan enrollment, but shouldn’t stop it from growing, says the Congressional Budget Office. Without the new law: 14.3 More profits than anticipated Medicare Advantage turned into a much bigger profit center than the GAO had originally estimated. In June its analysts determined total profits were $1.74 billion in 2005, well ahead of the $600 million that had been projected. MA plans achieved that by spending less than projected on medical expenses. Projected Nonmedical expenses 7.9% Profit 1.9% Nonmedical expenses 9.2% Actual Profit 5.1% Current 9.6 With the new law: 12.0 MA membership (in millions) 2008 Source: Congressional Budget Office Medical expenses 90.2% Medical expenses 85.7% 2013 (projected) $33.7 billion Source: Government Accountability Office $35.0 billion 24 MANAGED CARE / SEPTEMBER 2008

Table of Contents Feed for the Digital Edition of Managed Care - September 2008

Managed Care - September 2008 Editor’s Memo Contents Legislation & Regulation News and Commentary Medication Management Compensation Monitor Archimedes Lends Hippocrates a Hand Some Other Predictive Modeling Programs Messing With Medicare Advantage The Trouble With MAC MedPAC’s Suggestions Sound Familiar The Leader in Patient Satisfaction Formulary Files Plan Watch Tomorrow’s Medicine Ad Index Outlook

Managed Care - September 2008

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