Federal officials say about $205 billion of the $418 billion in Medicare savings they hope to achieve over the next decade will come from spending on the Medicare Advantage program.
U.S. Centers for Medicare and Medicaid Services (CMS) predicts in a new report that it will cut just $15 billion in Medicare spending over the next 10 years by improving the quality of care that enrollees receive, and that just $4.9 billion will come from eliminating waste, fraud and abuse.
CMS hopes to save about $29 billion by changing the way Medicare pays providers.
The cost-cutting provisions are part of the new Affordable Care Act, the legislative package that includes the Patient Protection and Affordable Care Act (PPACA).
Medicare Advantage plans now cover 11 million of the 47 million Medicare enrollees.
The Medicare Advantage program gives private nonprofit and for-profit carriers a chance to sell subsidized health coverage to Medicare enrollees. Most program carriers try to provide the kinds of benefits that enrollees would get if they combined traditional Medicare coverage with Medicare supplement insurance but at a lower total price.
CMS officials say Medicare Advantage program coverage costs the government about 14% more per enrollee than the government spends on traditional Medicare enrollees, and that the gap means the government is spending about $1,000 extra per Medicare Advantage enrollees.
“Higher performing plans will qualify for payment bonuses beginning in 2012,” CMS says.
Defenders of the Medicare Advantage program say the program fills major gaps in basic Medicare benefits. They point to studies suggesting that Medicare Advantage plans improve enrollees’ quality of life and may improve enrollees’ life expectancy.