The Medicare Modernization Act (MMA) has succeeded in providing seniors with more “choice” among Medicare Advantage (MA) private health insurance plans. However, particularly in rural areas, much of the increased choice stems from a proliferation of private fee-for-service (PFFS) plans, which mimic traditional Medicare’s fee-for-service structure but receive reimbursements that exceed spending in the traditional program. PFFS plans are paid at the county level. PFFS plans are paid at the county level. They must provide both Part A and Part B services, and many provide Part D prescription drug coverage as well.
In a Health Affairs Web Exclusive (free access for two weeks) published yesterday, Marsha Gold documents the increase in PFFS plans and questions whether these new plans are worth the cost. Gold, a nationally recognized expert on MA who has been analyzing the program and its predecessor, Medicare+Choice, for more than a decade, is a senior fellow at Mathematica Policy Research.
“Perspectives on current MA trends are largely in the eye — and orientation — of the beholder,” Gold observes. “If one believes that all choice is good and competition brings prices down, MMA has clearly been successful in expanding choice and competition.” On the other hand, “the current expansion is fueled by MA payment rates that exceed what traditional Medicare now pays.” Gold says that “the fiscal burden on Medicare is especially high for PFFS plans” because they are offered disproportionately, and enrollment in them is highest, in “floor” counties, where the gap between traditional Medicare and MA rates is highest.
Gold also notes the reports of aggressive and deceptive practices sometimes used to sell PFFS and other MA plans, and the fact that seniors are sometimes surprised to find that their physician does not participate in the PFFS plan they have been enrolled in. The New York Times (subscription required), Washington Post and the Wall Street Journal Health Blog have recently reported on these issues, and the Senate Special Committee on Aging is scheduled to hold a hearing today on abusive sales tactics.
Proponents of the Medicare Advantage program often point to the disease management and care coordination offered by its HMOs, and to a lesser extent its PPOs. However, PFFS plans offer little if any care coordination.
The question the Health Affairs Blog offers for our readers, then, is this: Are Medicare PFFS plans worth it? What benefits, if any, do they offer that make up for the higher payments they receive and the potential for consumer confusion that they raise?