Health reform brings significant changes to Medicare, Medicare Advantage

Mar 27 2010

As part of a series, "The Five Keys To Health Reform's Success Or Failure," Time writes: "Fiddling with Medicare is not for the faint of heart. ... But if there are to be far-reaching changes in the way medicine is practiced in this country, Medicare will have to drive them. ... 'Medicare has to go first,' says Len Nichols, director of the Center for Health Policy Research and Ethics at George Mason University. 'It's the only buyer [in the health care market] with enough power. It's the only buyer big enough to make the hospitals pay attention.' The huge government program also gives health policymakers a window into what is working and what isn't."

"The new law also addresses some problems with the current system. It begins by phasing out the wasteful subsidies that go to private insurers that contract with the federal government to provide Medicare-type benefits to seniors. ... These overpayments will be gradually ended beginning in 2011, and seniors enrolled in Medicare Advantage will feel the pinch as insurers try to find a way to continue coverage without this subsidization. (Guaranteed Medicare benefits as defined by federal law will not be changed.)" (Tumulty, Pickert and Park, 3/25).

The Salt Lake Tribune: "It is unclear what will happen to Medicare Advantage plans, since those decisions are left to the private insurers who sell them. But the law also makes changes to Medicare, including improving all seniors' prescription drug coverage, that are known." The Tribune examines other key questions such as whether the $400 billion in future cuts to Medicare will change benefits and changes to Medicare prescription-drug benefits (May, 3/25).

CQ HealthBeat: The new law "would essentially level the playing field payment-wise between private health plans in Medicare and the traditional fee-for-service side of the program, according to a George Washington University study. As such, it would fulfill the goal set by set by Barack Obama as a presidential candidate and the recommendation of the Medicare Payment Advisory Commission, said the study by GW researchers Brian Biles and Grace Arnold. ... Under the new policy, all 3,140 counties in the nation would be ranked from lowest to highest by average fee-for-service costs and divided into four 'cohorts' of 785 counties. Payments to [Medicare Advantage] plans would be set at different percentages of fee-for-service costs depending on the cohort. ... Plans that performed well on quality ratings would see a boost of five percentage points in their payments relative to fee-for-service costs" (Reichard, 3/25).

Pittsburgh Post Gazette: "Inside this week's landmark health care reform bill is a piece of good news for Western Pennsylvania hospitals and, by extension, their employees. By October 2012, the wage index formula used to establish Medicare reimbursement rates will be effectively flattened so that no area of the country gets significantly higher rates than other areas. For years, Western Pennsylvania hospitals have seen their reimbursement rates decline while other areas have fared better, sometimes inexplicably. The current wage index, for example, gives a higher rate to Cleveland than Pittsburgh ... The wage index establishes how much money an area receives as reimbursement for wage costs, based on a formula that factors salaries of hospital employees, plus pensions and other labor costs" (Twedt, 3/26).

The Palm Beach Post: "Stung by charges that it had endorsed a half-trillion worth of benefit cuts for seniors, AARP went on the offensive today, extolling the merits of health reform to both its members on Medicare and those still too young to qualify. Nora Super, AARP's top lobbyist, confronted doomsday predictions on conservative TV and radio suggesting that the $500 billion in Medicare cuts will mean a drastic loss of benefits and access. Without action, Medicare's rising costs are unsustainable and would threaten its very future, she said speaking with reporters in a nationwide conference call. She called the cuts 'savings.' ... As a whole, the package of changes was born of compromise and will benefit many, including older Americans, the AARP executives said." AARP executives also offered a list of concrete changes on how "the lion's share of health reform changes will be for the better for older Americans" (Singer, 3/25).

AARP Bulletin offers "a simple guide to the new law for those age 50-plus" that includes explanations about how reform will affect people with employer insurance, Cadillac plans, Medicare Advantage plans, those with children who are under 26 years old and those that have preexisting conditions (Agnvall, 3/25).