Fee-For-Service Medicare Advantage Under Heavy Fire At Senate Hearing

“Over time, however, this original version of the potential of private plans has been compromised and ultimately undermined by successive payment increases to plans,” he said. “Payment increases have been so large that plans no longer need to be efficient to attract enrollees.”

From the provider perspective, Albert Fisk, medical director of the Everett Clinic in Snohomish County, Washington, said that compared to Medicare Advantage HMO or PPO plans, “private fee-for-service Medicare Advantage plans are extremely hard to deal with both in terms of negotiating fair rates and collaborating on care coordination.”

The experience has been so bad, he said, that the clinic’s board decided in October of last year to stop accepting fee-for-service patients after a 15-month transition period.

The clinic, he said, held a number of seminars for its patients to explain the decision, and the response was “reassuring” according to Fisk. “Patients understood why we needed to make the change,” he said. “They had no idea that their program, if allowed to grow unchecked, would ultimately threaten the economic health of the clinic and make it impossible to continue to provide the best possible care to our patients. They were very surprised to learn that the program did not cover its cost.”

Daryl Weaver, CEO of the Yazoo Community Hospital appearing on behalf of the National Rural Health Association, also spoke of the difficulties for providers to receive payment from fee-for-service Medicare Advantage plans, adding “it’s not uncommon for it to take as long as a year to collect payment.”

That problem is especially of concern for rural hospitals, he noted, where “the money we collect this week is literally what we use to make payments and cover payroll next week.” That situation, he said, is an unfortunate reality for many rural providers and while plans generally perform somewhat better about payment over time, it is still common for it to take 9 months for facilities to collect from the plans.

Looking forward, witnesses at the hearing responded very positively to a suggestion by Wyden that Congress apply “some of the principles of Medi-gap,” and most notably standardization of benefits, to the Medicare Advantage market.

“I would love to see the benefits standardized,” said Elyse Politi, the State Health Insurance Program coordinator for the New River Valley Agency on aging in Virginia. Doing so, she said, would make providing counseling to beneficiaries significantly easier as benefits could be clearly contrasted and compared across different plans. Currently, she said, the need for more counseling, and more counselors, is significant. “Counseling sessions can be difficult and time consuming because they need to be individualized,” she noted. “They require more than knowledge about the PFFS plan and other Medicare Advantage options. They require knowledge of original Medicare, Medigap, Medicare Savings programs and Medicaid.

Another topic that repeatedly came up was the marketing of private fee for service Medicare advantage plans. Politi said that many beneficiaries in Virginia, particularly low income, dual eligible, are drawn in by marketing that uses words such as “free” to describe coverage and offer plans without premiums.

Sen. John Rockefeller, D-W.Va., called it “unconscionable” that private fee-for-service plans would be making inroads with dual eligibles, but Politi said ‘it happens more often than not.”

Baucus touched on the marketing issue in his opening remarks to the hearing, noting that it would not be the focus for the hearing but will be given the committee’s attention in the near future.

“The administration’s lax oversight of sales and marketing tactics is another factor that has led to extensive growth in private fee-for-service,” he said. “We will delve into issues of marketing in Medicare Advantage at a separate hearing in the coming weeks.”