Congressional committee debates Medicare Advantage, cries foul over coming payment cuts

The House Ways and Means Health Subcommittee held a bipartisan debate Wednesday over the future of Medicare and planned cuts to the Medicare Advantage program as sharp party divides over healthcare continue to widen.

Democrats oppose a Republican proposal to dismantle Medicare in favor of a private voucher system, said ranking member Jim McDermott, D-Washington.

There is no current plan in the House or Senate for a voucher system to replace Medicare.

[Also: CMS lifts star rating reductions for sanctioned Medicare Advantage plans]

Something must be done, said Subcommittee Chairman Pat Tiberi, R-Ohio, because the Medicare system is headed towards the brink of redness, he said.

Legislators are meeting to find ways to prevent Medicare from going bankrupt. The health coverage for Americans 65  and older could become insolvent in 8 to 10 years as an estimated 10,000 Baby Boomers a day turn 65, said Rep. Vern Buchanan, R-Florida.

As they debated changes to Medicare, legislators talked of being bombarded by television ads and mailings asking for changes to the planned cuts to Medicare Advantage program, ahead of the Centers for Medicare and Medicaid Services release of the final payment rates on April 4.

[Also: CMS to release preliminary Medicare Advantage payment plan]

The changes in implementing new methodology to calculate Medicare Advantage payments would result in an estimated 0.5 to 3.9 percent cut to Medicare Advantage payments in 2017, according to America's Health Insurance Plans, which has been lobbying to keep funding as it is.

Medicare Advantage plans were paid an estimated $170 billion last year.

About a quarter of Medicare beneficiaries are enrolled in Medicare Advantage due its more comprehensive coverage, according to Katherine Baicker, an economist and a professor of health economics in the Department of Health Policy and Management at the Harvard School of Public Health. who attended Wednesday's hearing.

Medicare Advantage was created in large part to improve the efficiency of healthcare delivery by promoting competition among private managed care plans.

Medicare Advantage payments are an estimated 10 percent higher than those to Medicare because of the increased coverage.

"I would point out those cuts are bringing Medicare Advantage in line with what traditional Medicare spends," said Stuart Guterman, senior scholar in residence for The Commonwealth Fund.

The answer is to improve traditional Medicare so it's on a level playing field to compete with Medicare Advantage, he said.

"One obvious fact, people in Medicare Advantage get more benefits, that is why it is a higher cost," said Robert Moffit, a senior fellow in the Heritage Foundation's Center for Health Policy Studies. "I agree we need a level playing field to bring Medicare Advantage and Medicare into a direct head-to-head competition, in which we would have a common payment system that would apply to all."

Diane Black, R-Tennessee, a nurse, suggested they file a bill for a pilot project for value based insurance design for Medicare Advantage that would offer services of high value for beneficiaries with chronic conditions.

Earl Blumenauer, D-Oregon, said Medicare Advantage needs performance metrics.

[Also: CMS hits Humana with $3.1 million penalty for Medicare Advantage, drug plan violations]

"My plea is for the Congressional Budget Office to actually look and find out how much Medicare Advantage is actually saving taxpayers," he said. "There's nothing wrong with looking under the hood and finding out."

Tiberi said he's also heard suggestions to combine Medicare Parts A and B.

"My frustration is, at the end of the day, if we're going to make a Medicare system that benefits seniors in total, if we continue to berate a system …  I don't think it's a good way to come together to serve seniors in the most cost effective, value-added way," Tiberi said.

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Moffit suggested Congress raise the age of Medicare eligibility gradually over the next 10 years from 65 to 68, or at- least to 67, the eligibility age for Social Security for those born after 1954. Blumenauer said he was concerned about raising the age of retirement because it removes from the program the younger senior citizens who are the least costly users of Medicare.

Members of the subcommittee have two weeks to submit comments.

Twitter: @SusanJMorse