Report Finds MA Plans Designed Benefits to Steer Healthier Enrollees to Plans with High Cost Sharing
According to a Government Accountability Office (GAO) report requested by House Ways and Means and Energy and Commerce Committee leaders, Medicare Advantage (MA) plans in 2008 used lower premiums as a way to steer healthier enrollees into certain plans, but when these enrollees become ill they are at risk of considerable and unexpected out-of-pocket expenditures.
CMS reviews the benefits of private plans participating in Medicare to ensure that their designs are not discriminatory towards sicker enrollees. However, until recently, the agency had not formally defined nor vigorously enforced standards for discriminatory benefit design. The GAO report describes how CMS, under the Obama Administration, has revamped its bid review process to ensure that plans are accountable for meeting minimum cost-sharing thresholds.
"This report shows that left to their own devices, insurance companies will design plans that benefit their profit margins above all else," said Rep. Pete Stark (D-CA), Chair of the House Ways and Means Health Subcommittee. "Unfortunately, these discriminatory plans leave many seniors with unexpected out-of-pocket costs, much higher than they would have had if they had been in traditional Medicare. As CMS implements Medicare Advantage reforms, they need to hold insurance companies accountable so they can't stick seniors with the bill for their profit maximizing schemes."
"This report highlights the improvements the Congress and the Administration have made in the Medicare Advantage program; and also the continuing work we have to do," said Rep. Frank Pallone, Jr. (D-NJ), Chair of the House Energy and Commerce Health Subcommitee. "Beneficiaries enrolled in Medicare Advantage plans should not pay more than they would in fee-for-service Medicare."
Seniors in the discriminatory plan faced higher out-of-pocket costs (from page 11 of the GAO report):
* About $100 more for a typical inpatient hospital stay;
* About $150 more for a typical inpatient mental health stay;
* About $500 more for a typical SNF stay;
* Over $300 more for a year of renal dialysis.
The Affordable Care Act helps prevent cherry-picking by limiting the ability of plans to charge higher cost-sharing for services likely to be used sick enrollees. These services include skilled nursing, dialysis, and chemotherapy -- none of which may exceed that of fee-for-service Medicare. The law also gives CMS additional authority to establish similar cost-sharing thresholds for all other Medicare-covered services.
The report was requested by Representatives Waxman, Levin, Dingell, Rangel, Pallone, and Stark. To view the entire report, please visit: http://go.usa.gov/3Wo