A commenter on this site told me to look up “Obama’s $8.3 billion slush fund”, so I googled it. Lo and behold, there are lots of stories in the news with those words in the title. Fox News, the New York Post, the Washington Examiner, and numerous other websites are slamming the Obama administration for a program that rewards Medicare Advantage plans for being average, and encourages them to improve the quality of their services to seniors.
The “slush fund” is a bonus program connected to the star ratings for Medicare Advantage plans. The ratings go from one to five stars and are based on more than 30 criteria such as: member complaints; members leaving the plan; surveys of members and their satisfaction with the plan; telephone customer service; managing chronic illnesses of members; how many members get screening tests and flu shots.
I wrote abut this program last fall:
In 2012, the star ratings will be very important because Medicare will pay bonuses to Advantage plans that get three or more stars. Five-star plans will be able to enroll new members all year long. Unfortunately, Arizona doesn’t have any 5-star plans.
Fortunately for Arizona, 3-star and 3.5-star plans will get bonuses, because Medicare looked around and saw that most Advantage plans fall into this “average” range. The bonus rules were changed in order to keep the vast majority of Medicare Advantage plans in business. All Advantage plans are working hard to make improvements, with a goal of obtaining a 5-star rating (and higher bonus payments from Medicare). This is a good thing for people enrolled in Advantage plans.
So, those fiscally responsible Republicans are now clamoring for this program to be discontinued – although they say that, without these additional funds, 12 million people enrolled in Medicare Advantage plans across the country would face big changes to their Medicare coverage.
I have written previously that this program is politically motivated and here’s why:
The Affordable Care Act requires payment cuts to Medicare Advantage plans because they have been overpaid for years. These cuts are being phased in over several years so Advantage plan management can adapt to them.
I figure the Obama Administration realized they could not afford to kill off Medicare Advantage plans because 25% of Medicare beneficiaries are enrolled in these plans, and enrollment is much much higher in some key locations such as Miami, Philadelphia, New York… and even Phoenix and Tucson. (See more details in my post from last year.) So they decided, “if we can’t kill Medicare Advantage, let’s try to make it better”. But the $8.6 billion being spent to encourage Medicare Advantage plans to provide better service to their enrollees is contrary to the cost saving requirements that are part of the Affordable Care Act.
Obama opponents say the bonus payments are a waste of Medicare money and a payoff to hold onto seniors’ votes in November. They may be correct. But others might say this is an investment in making Medicare Advantage plans better.
Medicare Advantage enrollment keeps rising, and the biggest insurance companies in the country are spending billions of dollars buying Medicare Advantage companies. I wrote last year about Medicare Advantage as a good investment.
So what do these insurance companies know that the rest of us don’t?
I have a feeling they know that Medicare Advantage is here to stay. And the future of Medicare may be these private plans. Medicare is being privatized slowly but surely, especially in big urban areas like Miami, New York, Phoenix, Los Angeles, Las Vegas, and many cities and their suburbs.
Wellpoint bought CareMore for $800 million last year.
Cigna Corp agreed to buy HealthSpring Inc for $3.8 billion.
UnitedHealth Group Inc acquired XLHealth Corp this year for an “undisclosed amount”.