Keeping the Promise: Allowing Seniors to Keep Their Medicare Advantage Plans If They Like Them

Hearing Description: The House Energy and Commerce Health Subcommittee recently met to examine how CMS’s proposed ruling and Obamacare will affect Medicare Advantage beneficiaries. The witnesses were split on whether it will have a negative affect or no effect at all. Some believed that because of the proposed ruling, costs for seniors were definitely going to rise.

Hearing Date: March 13, 2014

Hearing Summary: Prepared for AAPS by the Market Institute

The House Health subcommittee recently met to discuss Medicare Advantage plans and how they are being affected by Affordable Care Act. In his opening statement, Chairman Joe Pitts (R-PA) said that 30% of Medicare beneficiaries are enrolled in Advantage plans. Half of new enrollees are signing up for Advantage. The CBO reported that Obamacare cut $700 billion from Medicare, with a little under half affecting Advantage. These cumulative cuts from the Democrats’ policies on seniors could result in plan exits, reductions in service areas, reduced benefits, provider network changes, and MA plan disenrollment. Rep. Michael Burgess (R-TX) said in his opening statement that President Obama was deceptive when he said that Medicare cuts would be used to fund Obamacare and benefit Medicare beneficiaries.

Rep. Frank Pallone (D-NJ) said in his opening statement he was disappointed at the Republican’s tactics in holding the hearing. The Affordable Care Act allowed Medicare to be placed on a sustainable track. The MA program should become more robust and will be an area of growth for insurance companies.

The first panel of witnesses consisted of various members of the U.S. House of Representatives:

Rep.Erik Paulsen (R-MN) testified in his opening statement that he has received numerous letters from seniors concerned about cuts to their MA plans. The MA program is facing Obamacare-mandated payment cuts, the Health Insurance Tax, and the Coding Intensity cut in the Fiscal Cliff deal. Instead of increasing costs for seniors and hindering plans’ ability to utilize innovative models of care, Congress should provide more flexibility to plans and make it easier for seniors to participate in MA like plans. He is authoring legislation to allow Medicare beneficiaries to contribute their own money to their Medicare Savings Accounts.

Rep. Jeff Denham (R-CA) testified his bill,“The Seniors Right to Know Act” is straightforward legislation will serve to inform the more than 14 million seniors currently enrolled in Medicare Advantage about how the ACA is affecting the healthcare plans that they rely on every day. MA plans maintain very high satisfaction scores from seniors. But, the impact of the ACA will cause higher costs for seniors across the country. Congress must act today to protect the future of Medicare Advantage by repealing the cuts and taxes on the program.

Rep. Dennis Ross (R-FL) testified cuts cuts to Medicare have already crippled innovative programs, like home health visits, instituted by Medicare Advantage plan sponsors to ensure seniors are able to maximize the value of health care services they receive. Overall health care spending and utilization habits are a critical threat to America’s declining fiscal health. He introduced H.R. 4180, the Preserving Health Savings Accounts for Medicare Beneficiaries Act, which would follow this consistently proven economic strategy for reducing health care costs across the spectrum. The legislation would incentivize younger Americans to establish Health Savings Accounts with the promise that upon Medicare eligibility they are able to transfer HSA funds into a Medicare Medical Savings Account.

Rep. Keith Rothfus (R-PA) testified that additional cuts to Medicare Advantage will lead to higher out of pocket costs, reduced benefits, and fewer plan options. Instead of limiting access to a successful program with which nine out of ten seniors are satisfied, we should be empowering them to make choices about what best suits them. Restoring the January-March open enrollment period also makes sense in light of the 2014 Medicare Advantage cuts and the new cuts just proposed by CMS.

Rep. Jackie Walorski (R-IN) testified that the Affordable Care Act and subsequent regulatory changes have placed significant and sustained financial pressures on Medicare Advantage. Cuts to MA will mean higher out-of-pocket costs, a more limited choice of doctors, decreased management of chronic conditions and decreased coverage for dental and vision services. Medicare Advantage plans are particularly critical to low-income, and minority beneficiaries. She introduced H.R. 4211, the “Advantage of Medicare Advantage for Minorities and Low-Income Seniors Act of 2014.” This legislation directs the GAO to study the number of minority and low-income seniors enrolled in Medicare Advantage, and to assess the impacts of Medicare Advantage payment reductions resulting from the ACA and other administrative actions.

The first witness on the second panel, Frank Little, a Medicare beneficiary with a Medicare advantage plan testified in his opening statement that he has received high quality, affordable coverage through our Medicare Advantage plans, but is concerned that plan choices are shrinking due to deep funding cuts in the program. His message to Congress is he hopes that Medicare Advantage continues to be a strong and adequately funded program.

The second witness on the second panel, Dr. Mitchell Lew, CEO and Chief Medical Officer at Prospect Medical Systems testified in his opening statement he is deeply concerned about cuts to the Medicare Advantage program. The role of MA as the backbone of coordinated care should not be ignored. MA provides a foundation on which the rest of the delivery system can build coordinated care. Chipping away at the MA program will undermine efforts to make progress in traditional Medicare. Congress and the Administration should develop policies that encourage population‐based payments to physician organizations in MA and in traditional Medicare. That entails encouraging the organized practice of medicine, strengthening the coordinated care infrastructure, providing incentives for team‐based care and primary care, and encouraging physician organizations to develop the ability to accept two‐sided risk arrangement.

The third witness on the second panel, Glenn Giese, Principal at Oliver Wyman testified in his opening statement that the projected overall impact of these policies would be to reduce MA payments by an estimated 5.9 percent in 2015. If the new changes proposed by CMS are implemented, the program would be hit by a double-digit cut over just a two-year period. Furthermore, the cuts could result in a high degree of disruption in the MA market, including the potential for plan exits, reductions in service areas, reduced benefits, provider network changes,
and disenrollment from MA plans.

The fourth witness on the second panel, Judith Stein, Executive Director for the Center for Medicare Advocacy testified in her opening statement that , on average, private MA plans are paid significantly more than it would cost to provide similar coverage in traditional Medicare. The ACA has improved Medicare Advantage by strengthening consumer protections. Most significantly, the ACA has put the Medicare program on a more sound fiscal footing by reining in overpayments to MA plans over a period of years.

The final witness on the second panel, Dr. Paul Van de Water, Senior Fellow at the Center for Budget and Policy Priorities testified in his opening statement that the ACA is gradually reducing MA payments. CMS has announced 2015 payment policies that will continue to hold down MA payments. Preventing overpayments to Medicare Advantage plans is sound policy. Along with the other cost-saving provisions in the Affordable Care Act, eliminating overpayments reduces premiums for all beneficiaries.

In response to questioning, Dr. Paul Van de Water said: