Medicare Advantage Payments to Insurers--Baucus Zeroing In!

Senate Finance Chair Max Baucus (D-MT) released his health plan white paper last week.Buried in it was this regarding how private Medicare payments to HMOs should be changed:“Congress must act to level the playing field between traditional Medicare and Medicare Advantage payments and the Baucus plan would do so. Enacted in July 2008, MIPPA [the July physician fee fix that will end PFFS] took

Shame on AARP For Their Response to the Deficit Commission Co-Chairs' Report

The Co-Chairs of the President’s Deficit Reduction Commission are out with their preliminary recommendations.They’ve done a great job—they’ve offended about everyone!But we have a nearly impossible but unsustainable challenge in front of us if we are ever going to crawl out of this deep hole.It is not so much what is on their list as what this list tells us about just how fundamental the changes

The Long-Term Viability of Medicare Advantage--Why Aren't the Analysts Asking for the Numbers to Add-Up?

I have been struck by the optimism regarding private Medicare presented by health plan executives during the recent earnings season and the analysts failure to press them on just how their numbers will add-up to sustain the long-term viability of a private Medicare strategy.The typical private Medicare health plan operates on a medical cost ratio in the mid-80s. Let's assume 86% for medical costs

Romney vs. Obama: The Romney-Ryan Medicare Plan Compared to the Obama Medicare Plan—Who’s Telling the Truth on Medicare?

They both are and they both aren’t.

I’ve never seen a week in health care policy like last week. The media reports have to be in the thousands, all trying to make sense of the furious debate between Obama and Romney over Medicare.

As someone who has studied this issue for more than 20 years, it has also been more than exasperating for me to watch each side trade claims and for the press to try

The Debt Deal: There Will Be Blood on the Floor on November 23rd

The debt deal is finally done. But it really isn’t an agreement on what cuts will be made, just the process that will be used to make them.The real work is left to the Congressional appropriators for the first $917 billion and for a super-committee of Congress for the second $1.2 trillion to $1.5 trillion in ten-year cuts.That second tranche is where health care will make its contribution. The

The End of Medicare Private Fee-For-Service--the Questions to Ask the Health Plans During Earnings Season

Now that we know private fee-for-service (PFFS) is dead on January 1, 2011 in all but the most rural markets, how will the health plans who have significant PFFS business respond?UnitedHealth is the first health plan to report earnings this quarter and I thought they had the right answer. From their earnings call transcript (Ovations CEO commenting):We have had a strategy of deliberately

Health Insurance Industry Stupidity—It’s a Rout From Here On Out

Why the health insurance industry allowed itself to be put in the place they were put by the Democrats yesterday is beyond me.With the Senate voting 70-26, and the House 383-41, to override President Bush’s veto of the bill to erase the 10.6% Medicare physician fee cut and pay for it with changes that will end the Medicare private fee-for-service program in 2011, the health insurance industry’s

Senate Votes 69-30 To Rescind Medicare Physician Fee Cuts and Cut Medicare Advantage to Pay For It

Ted Kennedy came to the Senate floor and led Senate Democrats to an amazing victory in their first real attempt to rein-in private Medicare spending and rescind the 10.6% physician fee cuts.The veto-proof margin puts President Bush's threat to veto the Senate bill, that was approved by the House on another veto-proof 354-59 vote just before the holiday, in doubt. Why bother?I was not surprised to

Run For the Hills, the Doctors Are Coming, the Doctors Are Coming!!!!

What is the one thing no human being should want to be next week?A Republican Senator at a Fourth of July Picnic.In the most amazing turn of events I have seen in 20 years of following health care policy in Washington, DC, the Democrats have the Republicans backed into an awful corner over the issue of the July 1st automatic 10.6% Medicare physician fee cut and corresponding private Medicare cuts

A Flawed Defense of Medicare Advantage

If private Medicare is to be continued proponents had better make better arguments than Scott Gottlieb made on Tuesday's Wall Street Journal op-ed page.Gottlieb is a former Bush Administration CMS official and is currently at the American Enterprise Institute.The context of his arguments is that this week Congress is debating making cuts to the private Medicare Advantage program in order to pay

Coventry Health Care--What the Heck Is Going On?

When WellPoint, Humana, United, and others had earnings warnings this spring I pointed out their issues were largely unrelated and amounted to more rounding errors as the helpful five year deceleration in health care trend came to an end and the business just wasn't as easy.But today, Coventry hit us with a 300 - 340 basis point adjustment in their expected Medicare Advantage medical loss ratio

Wall Street Relieved Democrats Unable to Cut Private Medicare Advantage Payments This Week--Why?

Congressional Democrats tried to take a big bite out of private Medicare this past week in an attempt to pay for an 18 month fix to the upcoming July 1st 10.6% reduction in Medicare physician payments.The effort, led by Senate Finance Chair Max Baucus (D-MT) got only 54 of the 60 votes he needed to end debate and move the issue to a floor vote. While getting that floor vote would almost have

UnitedHealth Knows How to Save $500 billion In the Medicare Program--So Why Do They Need the Extra Private Medicare Payments?

This from Erica Werner's AP story today:A major health insurer [United Health Group] says the government can save more than $500 billion in Medicare spending by sending patients to less expensive, more efficient doctors, reducing hospital visits by the elderly and cutting down on unnecessary care.So UnitedHealth knows how to save $500 billion in Medicare spending.Aside from the fact that all of

There Won't Be Any Health Care Reform Without Physician Payment Reform and There Won't Be Any Physician Payment Reform Unless the Docs Lead The Way

Physicians are facing a 10% Medicare fee cut on July 1st, a total of 15% in cuts on January 1, 2009, a cumulative total of 20% on January 1, 2010, and more each year thereafter.This spring the Senate Finance Committee is trying to solve the problem. In the short term, the idea is to reach out to future years, when they are betting the Congress would finally fundamentally reform the Medicare

What Good Has Private Medicare Done for Shareholders?

Wall Street seems to have lost faith in publicly traded HMOs.When the Medicare Modernization Act was passed in late 2003, it was seen as a major boon to the health plan business. Without a doubt the revenue and profits that have accrued from the privatization of Medicare have been more than substantial.But what good has Medicare privatization done for shareholders?The first week of January 2005,

Provider Payment "Food Fight"

For some time I have been saying that we are about to have a "food fight" between health care providers over who will sustain Medicare payment cuts--HMOs, docs, hospitals, nursing homes, durable medical equipment, and others.But even I was surprised by a recent email from the AMA that included this connection between provider payments and food:“While it’s unusual to think of farmers and hospitals

Health Plan Stock Prices Hard Hit Recently--Then There is John McCain

The recent hit HMO stocks have taken in the market has come because Wall Street has the jitters over revised earnings outlooks. Many health plan stocks have fallen by 50% in recent weeks.The Street is right to worry that the health plans are going to have difficulty pumping out more of the great and predictable earnings we've seen from them in recent years. But they also continue to miss a very

The 15% Medicare Doc Cut and Medicare Advantage Payments--The Battle Has Begun Again

Key players in the Congress are voicing some optimism that they can fix the 10% reduction in Medicare physician fees that will occur on July 1 and the further 5% reduction that is on track to follow on January 1, 2009.It is not surprising that Democrats would be sounding optimistic this early in the new session, but what is interesting is that we are hearing some willingness to compromise on the

One Fiscal Cliff Down and Three To Go––But No Real Solution On the Horizon

Last week's deal to avert the "fiscal cliff" settled very little.

For those in the health care market, I will suggest the big takeaway is that we should expect very little will be settled in the coming months and we will continue to face a great deal of uncertainty for years to come.
Without an agreement to alter the course we are on, it is estimated that we will add more than $10 trillion to

Medicare Advantage Cuts?

The highly profitable Medicare Advantage business is vulnerable to payment cuts to HMOs.Any of you that read this blog know that I have been predicting big changes for the Medicare Advantage business ever since the Democrats took control of the Congress--particularly for the controversial Private Fee-For-Service (PFFS) part of the program.But I have often felt alone in that opinion so a recent