| Your Weekly Medicare Consumer Advocacy Update April 30, 2009 • Volume 9, Issue 17 Who doesn’t like free money? But there are reasons why Medicare providers are barred from offering cash inducements to patients to undergo procedures or purchase medical equipment. Such kickbacks increase the use of services, raising costs for taxpayers and premiums for people with Medicare. Medical procedures also carry risks; consumers’ assessment of the risks and benefits of a particular procedure should not be clouded by the prospect of a cash benefit. Insurance companies are also prohibited from providing cash rewards to new enrollees in Medicare private health plans. With one exception. The law specifically allows insurers to rebate all or part of the Part B premium to enrollees in their Medicare “Advantage” plans. Effectively, that means the Medicare Advantage plan can kick back up to $96.40 per month—over $1,000 for the year—to its enrollees. Just to be clear: the Part B premium rebates DO NOT come from any savings generated by more efficient private plans. Medicare Advantage plans cost taxpayers 14 percent more than Original Medicare. Insurers will collect excess subsidies that will total more than $150 billion over the next 10 years. By enticing new enrollees with a cash benefit, insurers gain access to these lucrative government subsidies, raising costs to taxpayers and to the other people with Medicare who still pay the full Part B premium. Medicare Advantage plans often use the Part B premium rebate as a “come-on” to consumers. Enrollees get the cash in year one, but the benefit vanishes in year two or three. Picking an insurance plan on the basis of a short-term cash reward can also be dangerous for your health. Plans that offer Part B premium rebates often leave enrollees on the hook for major medical expenses, like chemotherapy. The Senate Finance Committee is right to consider prohibiting Medicare Advantage plans from kicking back the Part B premium to their enrollees. The proposal is part of a larger reform that would make Medicare Advantage plans include an annual out-of-pocket limit in their benefit packages, providing financial protection to enrollees who need high-cost treatment. High-quality insurance, not kickbacks, is what taxpayers and people with Medicare deserve from Medicare private health plans.
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1 May
Closing a Loophole
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