GAO: Low-Cost Medicare Advantage Programs Have High-Cost Expenses

Janice Simmons, for HealthLeaders Media , June 2, 2010

The insurance industry responded that the GAO report demonstrated that Medicare Advantage plans overall did save seniors money compared to traditional Medicare.

"The vast majority of seniors have expressed very high satisfaction with their Medicare Advantage coverage," America's Health Insurance Plans spokesperson Robert Zirkelbach said in a statement, referring to all plans.

"Recent reports have found that seniors in Medicare Advantage spend fewer days in a hospital, are subject to fewer hospital readmissions, and are less likely to have 'potentially avoidable' admissions," he said, "for common conditions ranging from uncontrolled diabetes to dehydration, compared to fee for service Medicare."

The GAO report noted that since 2008, CMS has revised its process for reviewing Medicare Advantage plans for the likelihood of discrimination. It developed a new methodology for setting cost sharing thresholds—criteria used to identify benefit packages likely to discriminate against certain beneficiaries.

For contract year 2010, CMS had contacted all Medicare Advantage plans with benefit packages identified as likely to discriminate, and "all plans subsequently met cost sharing thresholds," the report noted.

The new methodology for setting cost sharing thresholds allowed higher cost sharing for some services relative to 2009: For example, among plans without an out-of-pocket maximum or one above $3,400 for 2010, allowed cost-sharing for a typical inpatient mental health stay doubled (from $61 per day to $130 per day) and allowed cost-sharing for a typical skilled nursing facility stay increased (from $53 to $70 per day) compared to 2009 rates.

Janice Simmons is a senior editor and Washington, DC, correspondent for HealthLeaders Media Online. She can be reached at

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