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A new entry in the Health Affairs Blog, “Evaluating Medicare Programs Against Saving Taxpayer Dollars,” compares Medicare’s two payment programs that are paving the way to “value-based” care: the Medicare Shared Savings Program (MSSP) and Medicare Advantage (MA) program. They are both growing rapidly, the authors note, and, together, they comprise over half of Medicare beneficiaries today. The MSSP is Medicare’s program for Accountable Care Organizations (ACOs), a growing model of care delivery where providers can share in cost savings if they are able to reduce total health care spending for their patients while maintaining high-quality care.

The authors[1] make the basic yet often overlooked point that a beneficiary in MA increases total spending in Medicare, on average; conversely, the MSSP, which is part of Traditional Medicare, generates savings for the government. The increase in spending in the Medicare Advantage program is attributed to generous payments to health plans through risk adjustment and the quality star rating program, which have succeeded in attracting private insurance companies to participate, but which are rife with gaming. They also note, as referenced in a recent CMA Alert, that CMS is likely overpaying Medicare Advantage plans because patients who remain in Traditional Medicare systematically demonstrate lower spending patterns than those who decide to enter Medicare Advantage.

The authors propose a number of policy solutions to begin to correct imbalances. These solutions include structural changes and technical tweaks, with the goal of improving both programs and ensuring that they are equally funded and supported by CMS.

August 22, 2019 – S. Cavanaugh


[1] Including Sean Cavanaugh, former Deputy Administrator and Director of the Center for Medicare at the Centers for Medicare & Medicaid Services, and Center for Medicare Advocacy Board Member.

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