Medicare panel chair: Kill most special needs plans

The Medicare Payment Advisory Committion (MedPAC) — an advisory panel that’s supposed to help Congress cut Medicare health care costs — is recommending major changes in the rules that govern Medicare Advantage special needs plans (SNPs).

Dr. Glenn Hackbarth, the chairman of MedPAC, discussed the proposals today at a hearing on Medicare payment policies organized by the House Ways and Means health subcommittee.

Hackbarth talked about the need to take a broad approach to controlling the cost of care, by taking steps such as paying providers in ways that reward efficiency and improving care coordination. 

In the past, budget watchers at MedPAC and elsewhere have said that Medicare managers ought to try to save money by ending the practice of paying the private insurers that run Medicare Advantage plans more than Medicare spends to provide care for enrollees in the traditional Medicare program.

The whole point of starting the Medicare Advantage program in the first place was to give private insurers a chance to act on their boasts that they could provide better coverage than the government could for a lower price, not to pump up the private insurers’ profits, program critics have argued.

Hackbarth testified at the hearing that changes now in place already have narrowed the gap between what Medicare pays for Medicare Advantage enrollees and what the managers spend on traditional Medicare program enrollees.

This year, Medicare Advantage plan payments will average 104 percent of traditional “fee for service” (FFS) Medicare program spending, and that 4 percent gap is smaller than it was last year, Hackbarth said, according to a written version of his testimony posted on the Ways and Means website.

“We are seeing evidence of  improved efficiency in [Medicare Advantage] as plan bids have come down in relation to FFS while enrollment in [Medicare Advantage] continues to grow,” Hackbarth said.

One challenge, however, is that Medicare managers have implemented a Medicare Advantage plan quality bonus program recommended by MedPAC in a way that is too generous to plans with relatively low quality ratings, Hackbarth said.

The quality bonus program is operating “in a flawed manner, at very high program costs not  contemplated in the statute,” Hackbarth said.

Hackbarth had harsher words for many Medicare Advantage SNPs — plans that serve enrollees who need long-term care (LTC) services, have disabilities, or have chronic health problems.