The Medicare Modernization Act has succeeded in providing seniors with more “choice” among Medicare Advantage private health insurance plans. However, particularly in rural areas, much of the increased choice stems from a proliferation of private fee-for-service plans, which mimic traditional Medicare’s fee-for-service structure but receive reimbursements that exceed spending in the traditional program.
In a Health Affairs web exclusive, Marsha Gold documents the increase in PFFS plans and suggests that these new plans are not worth the cost. “The additional PFFS plan choices essentially allow firms to ‘piggyback’ on Medicare’s existing investment and policies and do relatively little to improve care management,” says Gold, a senior fellow at Mathematica Policy Research. “To the extent that PFFS enrollment grows, Medicare’s risk pool is fragmented, and the program’s purchasing power with providers is diluted.”
