A recent commonwealth fund study of Medicare Advantage plans is "based on flawed methodology," America's Health Insurance Plans (AHIP) president Karen Ignagni said in a Nov. 30 press release.
The study, titled "The Cost of Privatization: Extra Payments to Medicare Advantage Plans – Updated and Revised," finds that policies under the Medicare Modernization Act of 2003 paid an average of 12.4 percent more to private Medicare Advantage plans than to traditional fee-for-service Medicare plans in 2005.
The authors of the study suggest that the extra payments could be used in other areas to improve coverage.
Overall, private plans did not reduce Medicare costs in 2005, the study concludes.
Critics of the study have said the Commonwealth Fund used outdated data to estimate Medicare payments in the report and failed to account for recent changes.
"The study does not consider approximately $2.1 billion in savings generated by Medicare Advantage plans for the federal government in 2006," Ignagni said.
Brian Biles, MD, one of the authors of the study, disagreed.
"We are running the most recent data that [the Centers for Medicare and Medicaid Services] has released, which is from December of 2005," he said. For years, CMS released enrollment and payment information by plan name and county, but since January 2006 has refused to do so, he said.
The report argues that the $30 billion in Medicare Advantage funding could instead be used to reduce the Medicare Part B premium.
CMS Acting Administrator Leslie V. Norwalk said this analysis is misleading because it suggests using five years' worth of savings to reduce the Part B premium in 2007 alone.
"Describing this funding as an 'overpayment,' as some have, may lead some to conclude - erroneously - that the funds are wasted when, in fact, they provide valuable benefits, often to those who can't afford other, more costly, supplemental coverage," she said.
Recent changes to Medicare Advantage have included the phasing down of extra payments and a benchmark-based bidding system which, together, will bring payments down to 7 percent by 2010.
However, there remain statutes that require Medicare Advantage plans to be paid at more than 100 percent of fee-for-service, Biles said.
"The numbers that we have in this study seem to be pretty well the case in '06 and '07," he said. "The newer data doesn't make it any better, as best as we can tell."