KHN Morning Briefing

Summaries of health policy coverage from major news organizations

Medicare Advantage Rates Could Go Up, While Part D ‘Exceeding Expectations’

Seniors on Medicare Advantage plans could pay more in premiums, while Medicare payments for drugs, dialysis and power wheelchairs get mixed reviews.

"Despite near-zero inflation and recessionary conditions, health insurers in 2010 face another year of double-digit increases in the charges they pay for hospital services, physicians, drugs, and other healthcare costs," U.S. News and World Report writes in a news column. Many insurers will raise premiums and co-pays or eliminate some coverage of certain expensive drugs, but "[t]he biggest percentage impact of the changes may be felt by the estimated 11 million older Americans with Medicare Advantage policies, according to Edward A. Kaplan," senior vice president at the Segal Co., which surveys cost trends at health and drug-plan providers annually.

Medicare Advantage plans are private Medicare plans, which "offer more benefits than regular Medicare," for an extra premium from consumers. The Centers for Medicare & Medicaid Services also pays the insurers extra money, but "that is changing. CMS decided earlier this year to raise the amount it pays to the Medicare Advantage plans by only 1 percent in 2010, Kaplan said. With the plans facing cost increases of nearly 10 percent, they either must reduce coverages, cut profit margins, or raise premiums." Kaplan says he has already begun to see "'dramatic rate increases' of 20 to 35 percent. 'These Medicare Advantage plans were a big bargain, and now that's going to go away'" (Moeller, 9/2).

Business Review West Michigan: "Medicare Advantage plans do a better job than their fee-for-service counterpart at keeping patients from returning to the hospital after they are discharged as well as keeping them out of the hospital and the emergency room, according to the results of a new study. The study by a Johns Hopkins University researcher, commissioned by the Alliance of Community Health Plans, found that the 30-day hospital readmission rate is 27 percent lower for Medicare Advantage enrollees than for people enrolled in traditional Medicare." The Business Review reports that the "difference comes in the ability of the private health plans that offer Medicare Advantage policies to focus on prevention and provide follow-up care after a patient goes home, rather than simply pay medical claims for a hospital stay" (Sanchez, 9/2).

Reuters reports positive news for Medicare Part D: "The Medicare drug benefit may have caused confusion when it was launched in 2006, but the program has since 'exceeded expectations' in getting seniors coverage and trimming their medication costs, according to a new report. A study by the non-profit research organization RAND found that by 2008, nearly 90 percent of Medicare beneficiaries had drug coverage that was at least as generous as the standard benefit required of insurers participating in the program." The program on average "cut seniors' annual out-of-pocket costs by 16 percent, while increasing the number of prescriptions by 7 percent" (9/2).

Meanwhile, "doctors concerned about the care of chronic kidney failure patients in the USA hope to meet this month with the chief medical officer of the Centers for Medicare & Medicaid Services, which pays for most of it, to explore how it can be improved," USA Today reports. "Although the United States spends more than any other country on treatment of chronic kidney failure patients, most of whom are on dialysis, it has the highest dialysis death rates." In a letter to CMS, a group of leading nephrologists called for "substantial changes in the delivery and financing of care … to improve patient outcomes." In a response CMS wrote that factors beyond financing are also involved, including "a failure to follow scientific evidence-based guidelines and a reluctance to measure dialysis centers' quality and efficiency." USA Today reports that "Medicare is due to change how it pays for dialysis on Jan. 1, 2011, but CMS hasn't yet revealed details of the new payment structure, which had been expected in July" (Rubin, 9/2).

CNN: "Power-driven wheelchairs are costing Medicare and its beneficiaries nearly four times what suppliers pay for them, and competitive bidding could have reduced those costs, according to an inspector general's report released Wednesday. A standard power wheelchair costs the federal health insurance program for seniors an average of $4,018 to lease, compared with $1,048 for suppliers to buy, the Department of Health and Human Services' internal watchdog reported." The inspector general found that competitive bidding would have reduced the average cost by nearly $1,000 (9/2).

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