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AARP Opposes Medicare Advantage Inflated Payments

Leveling the Medicare Playing Field Should Be a Post-Recess Priority, Organization Says

AARP issued the following statement today, following the CMS announcement of 2008 Medicare Advantage rates.

“AARP believes inflated payments to Medicare Advantage plans are unfair and fiscally irresponsible. Congress should ensure that traditional Medicare and Medicare Advantage compete on a level playing field,” said AARP Director of Government Affairs David Sloane.

Last month, the independent Medicare Payment Advisory Commission (MedPAC) found that reimbursements to Medicare Advantage plans are 12 percent more than reimbursements to Medicare’s traditional fee-for-service program. All taxpayers and all Medicare members—not just the 18 percent of Medicare members enrolled in private MA plans – are funding these inflated payments.

“Right now Medicare payments clearly favor the MA program over traditional Medicare, which is unfair to the majority of beneficiaries who participate in the traditional program. The federal government should be financially neutral with regard to Medicare reimbursement,” continued Sloane.

Medicare Advantage plans were supposed to provide the same benefits as fee-for-service more efficiently—not at greater cost—to; the program. In the past, they were able to provide extra benefits to beneficiaries through the greater efficiencies achieved by managed care (e.g., care coordination, negotiated prices, provider networks). Today, because of the excess payments to the plans, they have no incentive to achieve these efficiencies.

According to the nonpartisan Congressional Budget Office (CBO), the federal government could save $65 billion over five years and $160 billion over 10 years, if Medicare Advantage plans were paid at the same rates as traditional Medicare providers.

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. 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.

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