Today, GAO released a report requested by Reps. Dingell, Rangel, Waxman, Stark, and Pallone on Medicare Advantage private fee-for-service (PFFS). The report finds that PFFS plans expose beneficiaries to serious financial risk, leaving them to bear much of the cost burden of their care. GAO also found that beneficiaries in PFFS plans disenrolled at an average rate of 21% compared to 9% for other Medicare Advantage plans.
PFFS plans pose an imminent risk to the financial health of their enrollees. We pay these plans a fortune to provide Medicare benefits. They say 'thank you' then turn around and go looking for excuses to deny claims. Enrollees in original fee-for-service Medicare are guaranteed that if a provider offers a service the beneficiary won't be stuck with the bill.
Beneficiaries need to be warned about the dangers of enrolling in these plans. Clearly these plans don't work if you actually get sick and need health care. CMS needs to follow the law and make sure beneficiaries know that more than one in five beneficiaries who enroll in these plans leaves within the year.
The behavior of these plans is deeply troubling — they cost us almost 20 percent more than traditional Medicare and promise us they're providing extra benefits to their enrollees. But today we learn that these plans charge Medicare beneficiaries more than 3 times the Medicare cost-sharing for some benefits when a beneficiary doesn't jump through obscure administrative hoops. We can do better than that, and I hope the next Congress and new Administration will work together to protect beneficiaries from this egregious behavior and root out the waste in the Medicare program.
PFFS plans are the most worthless aspect of the Medicare 'Advantage' program. These are the most overpaid plans of all and yet they offer the fewest benefits. Over the objections of the current President, Congress passed legislation which will reduce some of the problems with these plans in the future. I am confident that the Obama Administration will work with us to stop approving plans that do not provide adequate coverage.
GAO’s findings paint a troubling picture of just how much of a rip-off PFFS plans are for Medicare beneficiaries. As seniors decide what health plan is best for them, they need to know the real risks involved with these plans so that they do not make the mistake of signing up in the first place. This report also demonstrates the need for Congress and the new administration to eliminate these plans altogether.”
Beneficiaries may be charged for the entire cost of a service under PFFS. Enrollees in original fee-for-service Medicare are not charged the entire cost of a service unless the provider warns him or her that it may not be covered by Medicare. Medicare Advantage HMOs and PPOs have similar protections. Only in PFFS are beneficiaries stuck in limbo — their plans are not required to protect beneficiaries from huge financial liability, and their providers may not even know of that financial risk. GAO indicates that “beneficiaries in some PFFS plans were responsible for higher cost-sharing amounts if they (or their health care providers) did not contact their plans in advance” (to verify a service is covered). PFFS beneficiaries are stuck with the bill, which could easily run into the thousands of dollars for many medical services and procedures.
CMS is allowing PFFS plans to charge excessive cost sharing to Medicare beneficiaries. GAO also describes how PFFS plans charge exorbitant cost-sharing to beneficiaries who do not “prenotify” a plan before obtaining services — practices that are in apparent violation of laws governing PFFS plans. “For example, the coinsurance rate for certain durable medical equipment for one PFFS plan changed from 30 to 70 percent if beneficiaries or their providers did not notify their plans,” GAO reports. PFFS plans the GAO studied also increased cost-sharing for hospital visits by as much as $500 per stay if patients forgot (or didn't know) to contact the PFFS plan ahead of time, among many other cost-sharing increases. GAO also noted that “in contrast, the other MA plans (HMO and PPO plans) we reviewed did not have prenotification requirements, and Medicare FFS also had no such requirements,” meaning that only PFFS enrollees encountered these problems.
One in five PFFS plan enrollees disenrolls at the end of the year. Beneficiaries considering PFFS plans for 2010 should know that such plans have proven very unpopular with beneficiaries who have actually joined them. GAO found that beneficiaries are noticing the poor treatment they've received from PFFS plans and are voting with their feet, reporting that “from January through April 2007, beneficiaries in PFFS plans disenrolled at an average rate of 21 percent compared to 9 percent for other MA plans.” PFFS plans are even less helpful for sick enrollees who actually need to use their health benefits, as GAO notes: “beneficiaries who disenrolled from PFFS plans, on average, were sicker compared to all beneficiaries in PFFS plans.”