Reply #68: $43 Billion In Extra Payments Have Been Made To Private Medicare Advantage Plans Since 2004 [View All]

New York, NY, May 4, 2009—Private Medicare Advantage (MA) plans will be paid $11.4 billion more in 2009 than what the same beneficiaries would have cost in the traditional Medicare fee-for-service program, according to a new report released today by The Commonwealth Fund. This new analysis, The Continuing Costs of Privatization: Extra Payments to Medicare Advantage Plans Jump to $11.4 Billion in 2009, estimates that since MA was enacted in 2004, $43 billion in extra payments have been made.

In the report, Brian Biles, professor of health policy at George Washington University and colleagues find that extra payments to MA plans will amount to an average of $1,138, or 13 percent over fee-for-service costs, for each of about 10 million Medicare beneficiaries enrolled in Medicare Advantage plans. The $11.4 billion in extra payments in 2009 represents a 34 percent increase over 2008 payments, which totaled $8.5 billion. According to authors, the steep one-year increase was due to the increase in payment rates and enrollment in the private MA plans.

The bulk of these extra payments were mandated by the Medicare Modernization Act of 2003, which was intended to expand the role of private plans in Medicare in an effort to reduce growth in Medicare spending. Since 2004, MA plan enrollment has increased from 4.8 million to the current 10 million.