A CMS demonstration that’s adding billions to reimbursement of Medicare Advantage plans has been criticized – again – by the Medicare Payment Advisory Commission’s chairman for causing a surge in plan enrollment Congress never intended.
 
The Affordable Care Act (ACA) reduces payments to private plans by 3.5% and links such reimbursements to care quality. But a demonstration project CMS launched in late 2010 extended the quality payments beyond what was envisioned, “to the tune of billions and billions of dollars over 10 years,” MedPAC Chairman Glenn Hackbarth said during a Jan. 10 commission review of the Medicare Advantage program.
 
More than one out of every four Medicare beneficiaries currently is enrolled in a plan. As a result, home health agencies and other providers may be receiving reimbursement by plans significantly lower than they would have received for those enrollees under standard Medicare fee for service. Plan enrollment shot up 10% percent in 2012 and is expected to grow 8% to 10% this year, according to CMS and MedPAC staff projections.
 
Hackbarth said the commission does believe that given incentives, private insurance plans will provide better quality. “But that is a separate question from whether this is an appropriate use of the secretary’s demonstration authority,” he said.
 
In the three-year CMS demonstration program, higher payments for quality are given not just to the highest-performing plans with four or five stars on a five-star scale but also to average plans with three stars. CMS officials have said that by awarding bonuses to three-star plans, more insurers in the MA programs may be motivated to invest in systems, people and training programs to improve quality.