Medicare Advantage plans are being paid $11 billion more than it would cost to cover the same beneficiaries in regular fee-for-service Medicare, according to a new study.
The study, published Thursday by the Commonwealth Fund, questions how much local market competition MA plans face.
According to the Commonwealth Fund, among the 100 counties with the largest numbers of Medicare beneficiaries, 73 have highly concentrated MA enrollment, indicating a low level of competition. While a high level of competition is indicated in only three counties, the report shows. In 33 of the 100 largest counties, a single MA firm has more than 50 percent of MA enrollees.
The report comes as healthcare reform battles are reaching fever pitch on and off Capitol Hill. The Medicare Advantage program has long been favored by Republicans, while Democrats view it as too expensive.
To correct what it calls incentives for inefficiency created by overpayments, and to generate Medicare savings for offsetting the costs of health reform, the Obama administration has proposed eliminating extra payments to private insurers participating in Medicare Advantage and instituting a competitive bidding program where the plans will be paid according to their bids.
The high concentration of MA plan enrollment is likely to become more of an issue in the next few years, authors of the report said. In addition, MA plans may choose to exit areas where they have a small number of members, further decreasing the levels of competition in those markets.
"Given the relative lack of competition in many markets as well as the potential impact on traditional Medicare, careful consideration should be given to a new system for setting MA plan payments," the authors said.