By Robert Pear
The New York Times, April 22, 2012
Medicare is wasting more than $8 billion on an experimental program that rewards providers of mediocre health care and is unlikely to produce useful results, federal investigators say in a new report.
The report, to be issued Monday by the Government Accountability Office, a nonpartisan investigative arm of Congress, urges the Obama administration to cancel the program, which pays bonuses to health insurance companies caring for millions of Medicare beneficiaries.
Administration officials, however, defended the project and said they would not cancel it because it could improve the quality of care for older Americans.
In the 2010 health care law, Congress cut Medicare payments to managed care plans, known as Medicare Advantage, and authorized bonus payments to those that provide high-quality care. Investigators found that most of the money paid under the demonstration program went to “average-performing plans” rated lower than the benchmarks set by Congress.
A separate federal panel, the independent Medicare Payment Advisory Commission, also criticized the project, saying it increases “spending at a time when Medicare already faces serious problems with cost control and long-term financing.”
The panel denounced Medicare’s “overly broad use of demonstration authority” and said “limited Medicare dollars should go to truly high-performing plans.” It said “the extension of quality bonuses to the vast majority of plans is likely to result in far greater program costs than the reward system enacted” by Congress, and that by spreading the rewards so broadly, “the demonstration lessens the incentive to achieve the highest level of performance.”
The commission said payments to private plans, including the bonuses, were still about 7 percent higher than what the government would pay for similar beneficiaries in the traditional Medicare program.
The G.A.O. said the project “dwarfs all other Medicare demonstrations” in its impact on the budget, but is so poorly designed that researchers could not tell whether the bonus payments led to improved care. As a result, it said, it is unlikely to “produce meaningful results.”
And…
Medicare Advantage: Quality Bonus Payment Demonstration Undermined by High Estimated Costs and Design Shortcomings
Government Accountability Office (GAO)
March 21, 2012 (Released April 23, 2012)
Conclusion
Estimated to cost more than $8 billion, the MA Quality Bonus Payment Demonstration offsets a significant portion of PPACA’s MA payment reductions during its 3-year time frame. At the same time, the design shortcomings of the demonstration may undermine its ability to achieve CMS’s stated research goal — to test whether a scaled bonus structure leads to larger and faster annual quality improvement compared with what would have occurred under PPACA. Rather than rewarding only high performing plans, most of the additional payments made under the demonstration will accrue to average performing plans. In addition, the demonstration’s ability to test an alternative quality improvement incentive structure is compromised by its design. The reliance on predemonstration performance data, the absence of an appropriate comparison group of MA plans, and design features that are inconsistent with its research goal make it unlikely that the demonstration will produce meaningful results.
http://www.gao.gov/assets/590/589473.pdf
And…
By Don McCanne
Quote of the Day, September 16, 2011
The Medicare Advantage program began as a fraud. These private plans were paid 113 percent of the costs of the traditional Medicare program so that they could offer extra benefits to entice individuals away from the public program. Once a sufficient number of individuals joined the private plans, funding for the public program would be slashed and patients would flee into the private plans. Only then would the public learn that the next planned step would be to shift to a Ryan-type voucher (premium support), which would dump much more of the costs onto patients.
The Affordable Care Act included a provision to gradually reduce these Medicare Advantage overpayments. The scheduled reduction for 2012 will be less than 1 percent. But members of the Obama administration have been listening to the insurers and the Republicans. They decided that this very modest reduction might make them more vulnerable to Republican attacks as we enter an election year. So what did they do?
They replenished the reductions with billions of dollars in quality bonuses designed for top tier 4 and 5 star plans, but they expanded the program to include 3 star plans. That way, plans covering 90 percent of Medicare Advantage enrollees would receive additional payments. A quality bonus for almost every plan is nothing more than a blanket payment increase. They have preserved this gift to the private insurers and then have the gall to claim that the programs are stronger and more popular as a result of their “strong negotiations” with the plans!
https://pnhp.org/news/2011/september/obama-administrations-dishonest-promotion-of-medicare-advantage
Comment:
By Don McCanne, MD
When we need to reinforce the traditional Medicare program and provide it for everyone, the Obama administration has given more of our tax money to already-overpaid private Medicare Advantage plans in an effort to reinforce them instead.
The Affordable Care Act was designed by and for the private insurance industry in spite of overwhelming evidence that costs were higher and administration much less efficient than with the Medicare program. A concession was made to reduce the overpayments to the private Medicare Advantage plans to help balance the costs of the legislation. But when it came time for the reductions, the insurance industry prevailed on the administration to intervene since they would lose their competitive edge of being able to offer greater benefits and lower out-of-pocket costs because of these overpayments they were receiving.
The payment reductions were part of the legislation, so not much could be done about them. Instead, these phony quality bonuses were given to 90 percent of the plans, permitting them to sustain their competitive edge over Medicare. As the GAO report indicates, there is no way that these could be considered legitimate awards for higher quality. The only reasonable interpretation is that the Obama administration is supporting the private insurance industry by using extra tax dollars to give it a distinct edge over our public Medicare program.
This does not bode well for the next presidential term. If Barack Obama is reelected, he is already in bed with the insurers, and we can forget about any further move beyond ACA towards a public financing program for our health care. If Mitt Romney is elected, at least he wouldn’t be giving as much of our tax dollars to private insurers, but then he would abandon federal responsibility and turn the financing problems over to cash-starved state governments. The choice seems to be between bad and worse.
This should be a call for us to intensify our efforts to educate, to build coalitions, and to enlist the grassroots in support of health care justice for all. Not
all of us will see the fruition of these efforts, but nothing will happen if we don’t step up the effort now. Some of us will have to be satisfied with seeing a good start, but that’s better than watching our elected officials continue to bow in obsequious servitude to the insurance oligarchy.
