GAO: Medicare Advantage Carriers Picked Cherries

Plans in the good health group were more likely to have an out-of-pocket maximum, but the average OOP maximum for plans in that group, weighted by enrollment, was 55% higher than that for plans in the poor-health group.

Comprehensive dental and hearing aid benefits were more likely to be included in the benefit packages for beneficiaries in the poor-health group of plans whereas fitness benefits were more likely to be included in the benefit packages for beneficiaries in the good-health group of plans, the GAO found.

In the past, GAO officials found, the Centers for Medicare and Medicaid Services – the agency that runs Medicare -did not do much to screen Medicare Advantage plan designs to see if the plans might discriminate against sicker enrollees, Cosgrove writes.

Recently, CMS officials revised the bid review process to ensure that plans are accountable for meeting minimum cost-sharing thresholds. For the 2010 contract year, CMS officials “contacted all MA plans identified as having benefit packages likely to be discriminatory,” Cosgrove writes. “In addition, all plans contacted subsequently reduced cost-sharing amounts to at or below agency thresholds.”

House Democrats have charged that the GAO study shows that many Medicare Advantage carriers have come up with ways to attract healthier enrollees and send sicker enrollees elsewhere.

“This report shows that left to their own devices, insurance companies will design plans that benefit their profit margins above all else,” says Rep. Pete Stark, D-Calif., chairman of the House Ways and Means Health Committee health subcommittee.

As CMS implements Medicare Advantage reforms to comply with the healthcare reform law, it needs to hold insurance companies accountable “so they can’t stick seniors with the bill for their profit maximizing schemes,” Stark says.

America’s Health Insurance Plans, Washington, emphasizes that most Medicare Advantage plan enrollees like their plans and believe their plans suit their specific health care and financial needs.

Recent reports have shown that seniors in Medicare Advantage spend fewer days in a hospital, are subject to fewer hospital re-admissions, and are less likely to have “potentially avoidable” admissions, for common conditions ranging from uncontrolled diabetes to dehydration, compared to fee-for-service Medicare, AHIP spokesman Robert Zirkelbach says.

“Medicare Advantage plans reduce out-of-pocket costs for their enrollees,” Zirkelbach says.

In 2009, more 70% of Medicare Advantage plans capped out-of-pock costs, while the traditional fee-for-service plans offered no OOP maximums, Zirkelbach says.

In addition, because CMS recently revised the cost-sharing requirement for MA plans in 2010, the GAO itself says that “all plans met the new cost-sharing thresholds,” Zirkelbach says.