Medicare Advantage plans don't save over traditional Medicare, report says

The idea behind Medicare Advantage plans--in which the government pays private healthcare organizations a fee to manage care for Medicare beneficiaries--was that managed care groups might be able to care for beneficiaries more cheaply and effectively than traditional fee-for-service Medicare.

But that doesn't seem to be happening, if a new report is any indication. The report concludes that Medicare Advantage plans, which will be paid $11 billion this year, are getting $1,140 more per enrollee than it would cost to care for the same number of patients under FFS Medicare.

The study, which was funded by The Commonwealth Fund, concluded that paying Medicare Advantage 101 percent of fee-for-service costs--an idea floated by the Obama Administration--would save money in some cases, but in other states would not. For example, in 11 states, Medicare payments to MA plans would average more than 10 percent and $1,000 more per enrollee than average costs in FFS Medicare, and sometimes much more.

To learn more about this issue:
- read this Healthcare Finance News piece