You Can't Have the Medicare Advantage Private Fee-For-Service Training Wheels Forever

Actually, my point was that the industry's arguments to preserve private fee-for-service payments amounted to an appeal to preserve corporate welfare, not that the original PFFS program is corporate welfare, but I'll accept the gist of this story:

AP

Consultant Favors Cuts to Medicare Plans
Thursday June 14, 3:06 pm ET

By Matthew Perrone, AP Business Writer

Consultant Says Congress Should Limit Payments to Some Private Medicare Providers

WASHINGTON (AP) -- A health policy consultant said Thursday a popular Medicare health plan run by private companies amounts to "corporate welfare," and should be scaled back by Congress.

Robert Laszewski, president of Health Policy and Strategy Associates, said Congress should limit how long health insurers like Humana Inc. and WellCare Inc. can operate health plans in rural parts of the country that cost more than government-run plans.

Medicare is the government-run health benefit that covers 43 million seniors. Roughly 20 percent of those seniors receive their benefits through privately run Medicare Advantage plans.

In recent months some members of Congress have suggested cutting payments to a type of Medicare Advantage plan called private-fee-for-service, which costs the government about 19 percent more than traditional Medicare. Private-fee-for-service plans do not have the cost containment features that are characteristic of most other privately-run health care plans.

America's Health Insurance Plans, an industry trade group, says companies pass those larger payments on to seniors in the form of lower out-of-pocket expenses and extra benefits, such as dental and eye care.

But Laszewski, whose group consults with insurers, hospitals and physicians, told an audience of health care analysts and executives that this argument misses the point. The government brought private companies into Medicare to lower costs, Laszewski said, not to increase them.

Laszewski said Congress should limit how many years a company can operate under the private-fee-for-service model before transitioning to a model that is better at managing expenses, such as an HMO.

"We're going to expect that at the end of four or five years you're not going to be on the private fee-for-service training wheels anymore," and will have moved to a model that costs less than traditional Medicare, Laszewski said.

"Because if you can't manage costs for less than the traditional Medicare plan, then why are we doing this?