Congressional Briefing Highlights Problems with Medicare Advantage in Rural America

Source: AARP Press Center | October 10, 2007

WASHINGTON -- Prominent voices in the Medicare reform debate joined together on Capitol Hill today to highlight concerns with the implementation of private Medicare insurance plans in rural America, and ways to improve access to care for rural Medicare beneficiaries.

In today’s program, “An Evaluation of Medicare Advantage in Rural America,” leaders from AARP, the American Medical Association (AMA), and the National Rural Health Association (NRHA) briefed congressional staff on findings that raise large questions about whether beneficiaries are well served by the tremendous growth in Private-Fee-For-Service (PFFS) plans, which have become so prevalent in rural communities. These plans cost Medicare 119% of what traditional Medicare costs, on average, according to the Medicare Payment Advisory Commission.

“Private plans in Medicare were supposed to save Medicare money and expand choices for people in rural America, but after a few years in action some private plans have cost Medicare more and left beneficiaries at greater risk,” said Brian McGuire, Associate Regional Director, AARP. “Private Fee-For-Service plans are run at a high cost to Medicare and often lure people in with low premiums only to have high cost-sharing when they need it most; for example, for chronic conditions requiring extensive use of services. Solving our nation’s health care crisis demands access and affordable options – not one or the other.”

While Medicare Advantage plans are being paid at a higher rate, patient premiums are increasing and Medicare physician payments are being cut.

“A full 60 percent of physicians say that next year’s Medicare payment cut will force them to limit the number of new Medicare patients they can treat, and rural Medicare patients will be particularly hard hit, as additional payments to rural physicians also expire next year,” said AMA Board Member Ardis Hoven, M.D. “There needs to be a balance between payments to private insurance companies and payments to traditional Medicare. This is the path to preserving access to care for all Medicare patients.”

To provide an analytical perspective to frame the discussion, Marsha Gold Sc.D., a senior fellow at the independent, nonpartisan public policy research firm Mathematica Policy Research, kicked off the meeting with an overview of research findings on the experience of rural areas with Medicare Advantage. These findings showed that 84 percent of PFFS enrollees are in rural or urban "floor" counties paid more by Medicare to encourage MA offerings. In a recent Health Affairs article reviewing findings on such plans, Gold suggested that policymakers consider "whether beneficiaries are well served by policies that use scarce resources to encourage competition among largely unmanaged PFFS plans."

Brock Slabach, Board Member of the National Rural Health Association, said, “Medicare must continue to improve, but the fragility of our rural seniors and the rural health infrastructure demand something more than the Medicare Advantage plans of today. We can and must do better for our rural seniors.”

The documents released at today’s briefing can be accessed by clicking here.

About AARP
AARP is a nonprofit, nonpartisan membership organization that helps people 50+ have independence, choice and control in ways that are beneficial and affordable to them and society as a whole. AARP does not endorse candidates for public office or make contributions to either political campaigns or candidates. We produce AARP The Magazine, published bimonthly; AARP Bulletin, our monthly newspaper; AARP Segunda Juventud, our bimonthly magazine in Spanish and English; NRTA Live & Learn, our quarterly newsletter for 50+ educators; and our website, AARP.org. AARP Foundation is an affiliated charity that provides security, protection, and empowerment to older persons in need with support from thousands of volunteers, donors, and sponsors. We have staffed offices in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands.

About the American Medical Association
The American Medical Association helps doctors help patients by uniting physicians nationwide to work on the most important professional and public health issues. Working together, the AMA's quarter of a million physician and medical student members are playing an active role in shaping the future of medicine. For more information on the AMA, please visit www.ama-assn.org.

About the National Rural Health Association
The NRHA is a national nonprofit membership organization with more than 15,000 members that provides leadership on rural health issues. The association’s mission is to improve the health and wellbeing of rural Americans and to provide leadership on rural health issues through advocacy, communications, education, research and leadership. The NRHA membership is made up of a diverse collection of individuals and organizations, all of whom share the common bond of an interest in rural health.

About Mathematica Policy Research Inc.
Mathematica, a nonpartisan research firm, conducts policy research and surveys for federal and state governments, foundations, and private-sector clients. The employee-owned company, with offices in Princeton, N.J., Washington, D.C., and Cambridge, Mass., has conducted some of the most important studies of education, health care, welfare, employment, nutrition, and early childhood policies and programs in the U.S. Mathematica strives to improve public well-being by bringing the highest standards of quality, objectivity, and excellence to bear on the provision of information collection and analysis to its clients.