The Medicare Payment and Advisory Commission called for a "major overhaul" of Medicare Advantage policies in its annual report to Congress.
MedPAC, which advises the U.S. government on Medicare issues, published its annual report March 15. The commission estimated that in 2024 the government will spend $83 billion dollars more on Medicare Advantage beneficiaries than if they were enrolled in fee-for-service Medicare.
According to MedPAC's estimates, higher spending in Medicare Advantage will increase Medicare premiums by $13 billion in 2024, and coding intensity in the program will be 20% higher in Medicare Advantage than in fee-for-service in 2024.
"A major overhaul of MA policies is urgently needed for several reasons," the commission wrote in its report. MedPAC cited several problems that need to be addressed, including the disparity in costs between beneficiaries in fee-for-service Medicare and MA, a lack of information on the use and value of supplemental benefits, and challenges setting benchmark payment rates.
The committee repeated several recommendations to Congress it had made in previous years, including addressing coding intensity, overhauling the program's star ratings program and updating benchmark payments to MA.
MedPAC is also skeptical that supplemental benefits — funded by federal payments to the program — are providing sufficient value to beneficiaries.
Insurers have said if benchmark payments are lowered, they will have to cut supplemental benefits or raise premiums to accommodate.
"If payments to MA plans were lowered, plans might reduce the supplemental benefits they offer," MedPAC wrote in its report. "However, because plans use these benefits to attract enrollees, they might respond instead by modifying other aspects of their bids."
In a March 15 statement, Mike Tuffin, CEO of AHIP, said MedPAC's estimates are based on "speculative assumptions" and "overlook basic facts about who Medicare Advantage serves and the value the program provides."
"At a time when more than 33 million Medicare Advantage beneficiaries are counting on stability in their costs and benefits, policymakers should seek to strengthen and build on the value of the program — not undermine it," Mr. Tuffin said.
Read the full report here.