Private Medicare Advantage plans were paid an average 12.4% more per enrollee in 2005 compared with what the same enrollees would have cost in the traditional Medicare fee-for-service program, according to a new report from the Commonwealth Fund. The extra payments to Medicare Advantage plans amounted to $922 over fee-for-service costs for each of about 5.6 million Medicare beneficiaries enrolled in Medicare Advantage plans, for a total of more than $5.2 billion. The bulk of these extra payments were mandated by the Medicare Modernization Act of 2003, which were intended to expand the role of private plans in Medicare.
“Medicare should carefully examine whether extra payments to Medicare Advantage plans are the best use of dollars for the beneficiaries the program is designed to serve,” said Commonwealth Fund president Karen Davis. “These payments could instead be used to provide better benefits and reduce out-of-pocket costs for seniors and the disabled.” Eliminating extra payments to private plans could save Medicare a projected $30 billion over five years, according to the study’s authors.
