Medicare Advantage Plans "Unfair", "Inflated", Says AARP
The consumer group representing people aged 50 or older and their spouses came out swinging this week against the government's proposed Medicare Advantage rates.
“AARP believes inflated payments to Medicare Advantage plans are unfair and fiscally irresponsible. Congress should ensure that traditional Medicare and Medicare Advantage compete on a level playing field,” said AARP Director of Government Affairs David Sloane.
Last month, the independent Medicare Payment Advisory Commission (MedPAC) found that reimbursements to Medicare Advantage plans are 12 percent more than reimbursements to Medicare’s traditional fee-for-service program. All taxpayers and all Medicare members—not just the 18 percent of Medicare members enrolled in private MA plans – are funding these inflated payments.
“Right now Medicare payments clearly favor the MA program over traditional Medicare, which is unfair to the majority of beneficiaries who participate in the traditional program. The federal government should be financially neutral with regard to Medicare reimbursement,” continued Sloane.
Medicare Advantage plans were supposed to provide the same benefits as fee-for-service more efficiently—not at greater cost to the program. In the past, they were able to provide extra benefits to beneficiaries through the greater efficiencies achieved by managed care (e.g., care coordination, negotiated prices, provider networks). Today, because of the excess payments to the plans, they have no incentive to achieve these efficiencies.
According to the nonpartisan Congressional Budget Office (CBO), the federal government could save $65 billion over five years and $160 billion over 10 years, if Medicare Advantage plans were paid at the same rates as traditional Medicare providers.
Labels: AARP, healthcare, Medicare
Drug Price Increases Double Inflation
Brand name prescription drug prices continue to rise at about twice the rate of inflation, according to the latest
AARP Watchdog Report.
AARP’s Watchdog Report found that ten of the brand name drugs it tracks increased at least four times the rate of general inflation during 2006. Ambien led the pack with a 29.7 percentage increase in manufacturer price, followed by Combivent at 18.3 percent and Atrovent Inhaler at 16.9 percent.
"The report highlights that drug prices continue to skyrocket,' said David Sloane, Senior Managing Director, Government Relations & Advocacy. "Over time escalating drug prices will make Medicare drug plans unaffordable for older Americans. One way to address high drug prices is to take full advantage of Medicare’s bargaining power and allow Medicare to negotiate lower drug prices."
Bob Elliott, a 75-year-old retiree from Kentucky, enrolled in a Medicare drug plan in 2006 after losing retiree prescription drug coverage from his former employer. He takes six prescriptions daily and by July 2006 reached the coverage gap, also known as the “donut hole” at which time he began paying full price for his medications. Only two of his medications are available in a generic version. “It was real sticker shock,” said Elliot. "I went from paying a co-payment to full price. My out-of pocket expenses on drugs alone in six months reached $2,000. Prescription drug prices are too high and hit older Americans’ wallets the hardest." As brand name drug prices continue to rise more and more Americans can expect a similar fate.
"We need to send a loud and clear message to the pharmaceutical industry that Americans cannot afford to continue to pay the highest prices for prescription drugs in the world," continued Sloane.
The Watchdog Report shows that nearly 200 of the most commonly used brand name drugs for older adults rose 6.2 percent in 2006, nearly twice the general rate of inflation, which was 3.2 percent. 2006 also marked the first year that the new Medicare drug benefit was in effect.
In contrast, manufacturer list prices in 2006 for 75 generic drugs tracked by AARP’s Watchdog Report fell by 2.0 percent. This continues a downward trend for manufacturer price increases for already lower-priced generic drugs that began in 2003.
Labels: AARP, medical
