Senate Republicans want closer look at reform's effect on private Medicare plans

A quartet of Senate Republicans is calling on Medicare's top accountant to release the numbers behind his analysis of health reform's impact on the Medicare Advantage (MA) program.

The lawmakers — Sens. Charles Grassley (R-Iowa), Jon Kyl (R-Ariz.), Orrin Hatch (R-Utah) and Mike Crapo (R-Idaho) — say the steep cuts to MA under the new reform law will cause many plans to fold, while many others will be forced to drop benefits to remain profitable. 

In April, Richard Foster, chief actuary at the Centers for Medicare and Medicaid Services (CMS), issued a report that largely supported those claims. 

"The new provisions will generally reduce MA rebates to plans and thereby result in less generous benefit packages," the report stated. "We estimate that in 2017, when the MA provisions will be fully phased in, enrollment in MA plans will be lower by about 50 percent (from its projected level of 14.8 million under the prior law to 7.4 million under the new law)."

Currently, about 11 million seniors are enrolled in MA plans.

In a Sept. 24 letter to Foster, the GOP lawmakers requested all the internal number-crunching that resulted in those estimates. They've also asked for a breakdown of the effects on "rural versus urban areas," as well as "an estimate of how much less [MA] plans will be able to spend per member per month on reduced cost-sharing and extra benefits." 

The purpose, the senators wrote, is "to ensure that seniors are fully aware of how the health reform law will affect current and future Medicare Advantage enrollees."

The letter arrived just a few days after the Obama administration announced that enrollment in MA plans is projected to jump 5 percent next year, while average premiums will fall by 1 percent. Those figures, CMS officials said, belie the charges that the new law will cut benefits and hike costs. 

"Despite the claims of some, Medicare Advantage remains strong and a robust option for millions of seniors who choose to enroll or stay in a participating plan today and in the future," said CMS Administrator Donald Berwick.

The MA program — under which the government pays private insurance companies to cover Medicare patients — has been controversial since its creation in 2003. Enrollment in the program has skyrocketed, largely because many MA plans cover services, like dental and eye care, that traditional Medicare doesn't.

But the additional benefits have come with a cost. Despite initial promises that MA plans would eventually cost taxpayers less than the traditional program, the average MA patient costs roughly 14 percent more than the average senior under Medicare. 

The Medicare Payment Advisory Commission (MedPAC), an independent panel that suggests reforms to Congress, has been critical of the discrepancy, noting that a portion of the extra taxpayer cost “consists of funds used for plan administration and profits and not direct health care services for beneficiaries.”

MedPAC's analysis has fueled Democratic criticisms that MA is just a gift to insurance companies, and the new reform law cuts MA subsidies by roughly $145 billion over the next 10 years.

Next year, Medicare will freeze MA payments at current levels, before actual cuts take effect in 2012 and beyond. 

The Republicans have asked that Foster provide the information by Oct. 8.