Study: Private Medicare Costs $5.2B More

Medicare beneficiaries enrolled in private, managed care plans cost the government 12.4 percent more than those in the traditional program last year, for a total cost of more than $5.2 billion, according to a study released Thursday.

Payments to what are called Medicare Advantage plans amounted to $922 per beneficiary over what a comparable enrollee would have spent in the traditional fee-for-service program, said a study by the Commonwealth Fund, a private foundation supporting independent research on health and social issues. There are 5.6 million Medicare beneficiaries enrolled in the Advantage plans.

The report concluded that the policies which create the extra payments should be re-examined because the money might be better used for other purposes. Stuart Guterman, senior program director of the Fund, said the money could be used to provider richer benefits to beneficiaries or for lowering their monthly premiums.

"The question isn't whether the private plans are good or bad. The question is: Is the best use of money?" Guterman said.

Karen Ignagni, president and CEO of America's Health Insurance Plans, said the report overstates the payment amounts and that her organization is attempting calculate its own estimate. The Fund conducted its analysis using data from the Medicare Payment Advisory Commission, an independent federal body. But Ignagni has objections to the way the commission tallies its data.

Federal law does allow Medicare Advantage plans to get higher payments in rural areas and small cities, said Ignagni.

She said that those enrolled in the Medicare Advantage plans are very satisfied with the benefits and services they receive. She added that beneficiaries will be upset if the upcoming Democrat-controlled Congress changes the payment system in a way that adversely affects the plans.

"The Democrats need to take a look at who we are serving," Ignagni said.