‘Bordering on the ridiculous’: Dade Medicare plans’ pay scale to rise 13%
By Susan Jaffe
4/18/2008 © Florida Health News
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Schulbaum
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Last fall, Bob Schulbaum saw newspaper ads from private Medicare health plans offering great deals: $3,000 worth of over-the-counter drugs, and payment of members' Medicare outpatient premiums of as much as $1,150. But reading the fine print, Schulbaum discovered he was out of luck because he lives in Delray Beach; the benefits were not available in Palm Beach County.
Health insurers have
explained that because the government pays health plans thousands of dollars more to take care of a Medicare patient in Miami-Dade County than in its neighboring counties, the plans can afford to give extra benefits in Miami but not in Delray Beach.
And next year the disparity in payments is growing even larger. Plans in every other Florida county are getting a 3 or 4 percent raise, but they’ll get a bonanza in Miami-Dade. There, average payments will rise more than three times, as much as 13 percent, to about $1,238 per member per month.
Palm Beach residents were already fuming that Miami-Dade plans receive an average of $233 more a month per member than those in their county do. Next year, the gap goes to $344. Compared to Broward, Miami-Dade plans get an average of $175 more per member each month and next year, the gap widens to $280.
“I’m speechless,” said Schulbaum, who is rarely at a loss for words. For the past seven years, he’s been president of the Delray Alliance, 68 homeowners associations with a total of 72,000 members. “Someone from Medicare should come down here and tell us why a person is worth $344 more in Dade County,” he continued. “And they better not give us gobbledy gook.”
Federal laws are partly responsible for the problem. When Congress added drug coverage to Medicare in 2003, it also revised how the government calculates what to pay insurance companies that contract with Medicare to offer private medical and drug plans, called Medicare Advantage.
The formula set by Congress is based on a number of factors, said Vicki Gottlich, a senior attorney at the Washington-based Center for Medicare Advocacy: not only the cost of medical care but how much care patients in traditional Medicare receive, and how old and how sick they are, among other things. The law also requires that the payments are set at the county level, which means they vary from one county to the next.
In Miami-Dade County, the average payment to private health plans is among the highest in the nation and tops all other counties in Florida, according to a Florida Health News analysis.
The reason it’s so high is because the Medicare Advantage payment is based on how much traditional Medicare spends to take care of patients, according to Paul Spitalnic, director of the actuarial group at Medicare handling the Medicare Advantage payments. Medicare’s spending in Miami-Dade is “unusually high” compared to other counties, he said, because patients there receive more medical services than their neighbors.
More services mean higher costs, Spitalnic said. However, higher spending doesn’t buy better health care, as the 2008 Dartmouth Atlas of Health Care recently reported.
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Wexler
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South Florida Congressman Robert Wexler has heard that explanation and isn’t satisfied.
“What is the justification for so much over-utilization in Miami-Dade and why should Palm Beach and Broward suffer?” he asked. “Why should the same 70 year-old in Miami Beach require more services than a 70-year senior in Boca Rotan, statistically speaking?”
“Something is not kosher,” he said. “Something is wrong.”
Medicare doesn’t have an answer: The reasons why “have not been determined at this time,” Spitalnic said, even though the phenomenon has been known for years.
Plans in high paying counties also offer extra benefits because Medicare pays plans rebates. After Medicare sets the benchmark rate in each county, insurance companies bid for a contract. If a bid is less than the Medicare payment in a particular county, the plan can keep 75 percent of the difference as a rebate, which is supposed to be passed on to its members in extra benefits.
A February report from the Government Accountability Office, the independent investigative arm of Congress, found that a third of Medicare patients are enrolled in plans that expect to spend less than 85 percent of their total government payments on medical benefits.
“Most plan bids are below the benchmark,” said Spitalnic.
The actual amount plans receive— after rebates —cannot be released to the public, according to Medicare spokesman Joe Kuchler. A week after Florida Health News asked what law or regulation makes the payments secret, Kuchler replied that Medicare’s technical staff was researching the issue.
The GAO study said that plans received a total of $8.3 billion in rebates last year. For most of the plans GAO investigated, rebates average about $87 per member a month.
In February, Wexler along with U.S. Reps. Alcee Hastings, Ron Klein and Tim Mahoney sent a letter to Gov. Charlie Crist asking him to request that Medicare address the unequal plan payment problem in South Florida.
They pointed out that the U. S. Office of Management and Budget classified Miami-Dade, Palm Beach and Broward counties as one metropolitan area because of their economic and social similarities. Because of that designation, the congressmen argue that plans in those counties should be paid the same.
Although the governor has not yet responded, Crist spokesman Sterling Ivey said the governor “has been analyzing his options in relation to the Medicare payments in Florida.”
Wexler said he recently spoke to Crist, who “is very interested in the issue and wants to reach an equitable result.”
When Medicare announced the benchmark amounts for paying the Medicare Advantage plans next year --further tilting the lopsided payments--Wexler was as angry as Bob Schulbaum, whose organization appealed to Wexler for help.
“It’s totally illogical,” Wexler said. “It’s totally unfair and bordering on the ridiculous.”
Florida Health News Washington correspondent Susan Jaffe can be reached at susanjaffe@earthlink.net.
