- The Medicare Advantage (MA) program’s flawed methodology has led the federal government to overpay insurers by $1.2 billion to $3.1 billion in 2010, according to a new study by the Government Accountability Office (GAO). The report was conducted at the request of House Democrats.
- GAO urges Medicare officials to change the MA methodology for these private health plans. House Democrats say the report provides further evidence that Medicare is paying private plans too much.
- Under the health care law, Medicare payments to private health plans are already schedule to decrease. But Democrats said officials at the Center for Medicare and Medicaid Services (CMS) should change its methodology as a way to further reduce costs for the program.
- GAO found that MA health plans are categorizing patients differently than the traditional Medicare program is.
- The GAO report also said that CMS officials are have not recalculated the differences every year. Instead, CMS officials lowered MA payments in 2011 and 2012 by the same percentage that they did in 2010, instead of figuring out what the reductions should have been for each of those years.
- Lobbyists for health insurers said MA plans can do a better job of overseeing patients’ medical services by coordinating their care. Additionally, the report does not say that the MA plans are taking advantage of the system but just that fee-for-service and Medicare Advantage programs are not identifying patients’ conditions in the same way, say the lobbyists. The plans may do a more thorough documentation of patients’ conditions than the fee-for-service system.
- In a letter to GAO, CMS officials said that they found the conclusions “informative.” However, CMS has not signaled whether they will change the way payments are calculated.
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