MedPAC Annual Report, Part III

In one form or another, Medicare risk contracting with private health plans has been around for decades.  The current iteration, Medicare Advantage, has become very popular and currently serves over a quarter of all beneficiaries.  That popularity is endangered, however, by ideological hostility from the current administration and impending lower payment rates.  Almost all beneficiaries live in the service area of at least one MA plan and 86% have access to a plan that includes Part D, or drug, coverage and no premium.  MedPAC has been supportive of MA and of the concept of neutrality in spending on the same beneficiary whether in MA or the fee-for-service program.  The Commission notes that Congress and CMS have continued to move in this direction.  The Commission expressed approval of the quality improvement efforts of CMS, although it noted the misuse of a quality bonus plan authorized by Congress.   Special needs plans are a category of MA plans with limited enrollment categories, like institutionalized or chronic disease patients.  The authority for these plans expires in 2014 and the Commission recommends that this authority not be extended, except for a transition period for SNPs focusing on beneficiaries with a small number of serious, chronic conditions, and that institutionalized SNPs just become a permanent sub-category of MA plan and that SNPs covering dual eligibles also be treated as a permanent MA sub-category, so long as they take full clinical and financial responsibility for the beneficiary.  In its status report on Part D, which is all private plans, the Commission notes good access, high satisfaction rates and generally under-control costs.  The Commission also indicates the the competitive bidding design is likely leading to beneficiary switching of plans.