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Medicare Advantage plans pay docs about what traditional Medicare does: JAMA

July 14, 2017
  • A new JAMA Internal Medicine report found that health insurance companies involved in Medicare Advantage (MA) pay nearly the same as traditional Medicare. The report explored how payers in MA reimburse physicians compared to traditional Medicare and commercial health insurance.
  • In a review of 144 million claims for common services from 2007 to 2012, the study authors said MA plans “take advantage of the commercial market’s favorable pricing for services for which traditional Medicare overpays, including laboratory tests and durable medical equipment.”
  • “We found that physician reimbursement rates in Medicare Advantage are very similar to traditional Medicare. This is very different than what we see in the commercial insurance market, where insurers tend to pay physicians more than Medicare — sometimes much more,” said Erin Trish, the study’s lead author and an assistant research professor at the University of Southern California (USC) Schaeffer Center for Health Policy and Economics, said in a prepared statement.

MA has gained popularity with 19 million beneficiaries — about one-third of Medicare beneficiaries — now enrolled in a MA plan.

Despite MA’s popularity, the study authors said there is little known about how much MA plans pay physicians for services. The authors found that MA paid 96.9% of what traditional Medicare paid for a mid-level office visit, 91.3% of what traditional Medicare paid for a cataract removal in an ambulatory surgery center and 102.3% of what traditional Medicare paid for a complex evaluation and management of a patient in the emergency department.

Laboratory services and durable medical equipment saw much lower MA rates, including only 67.4% for a walker and 75.8% for a complete blood cell count.

“There are a few important examples where Medicare’s reimbursement formulas are outdated and private insurers have been able to negotiate lower prices than Medicare,” said coauthor Paul Ginsburg, who directs the USC-Brookings Schaeffer Initiative on Health Policy. “Political barriers slow down Medicare’s ability to follow the private sector when markets lead to lower prices. Medicare Advantage plans have not been constrained and obtained lower prices for enrollees.”

Any Medicare Advantage data is of interest to the industry. There has been little information released about MA payments. CMS also recently delayed releasing Medicare Advantage data from 2014 that it had planned to make public. Researchers had hoped to get their hands on those numbers to dig into the payments data.

Payments to MA insurance companies have been a hot topic this year. MA includes a risk adjustment payment program that pays insurers more for sicker beneficiaries. That program may lead to overpayments to payers. The Department of Justice recently became involved in two high-profile False Claims Act cases against UnitedHealth over alleged overpayments. The Justice Department is also investigating other payers involved in Medicare Advantage.

Overall, the new results released this week are positive for the MA program and doctors. The report should allay physician fears that private payers in MA are paying less for services than traditional Medicare.
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