Medicare Advantage Plans Costly to Beneficiaries

A recent Government Accountability Office (GAO) report shows that private fee-for-service plans can cost beneficiaries more out-of-pocket than the traditional fee-for-service program, according to a recent GAO report.

According to the report, administrative practices used by PFFS plans can lead to higher costs for Medicare beneficiaries. PFFS plans can charge Medicare beneficiaries for the full cost of services, whereas the fee-for-service program does not charge beneficiaries the full cost unless health care providers warn that Medicare might not cover the services, the report stated. PFFS plans also do not have to protect Medicare beneficiaries from financial liability, a requirement that Medicare HMOs and PPOs must meet, according to the report. In addition, in the event that Medicare beneficiaries do not inform PFFS plans before they receive services, the plans can require beneficiaries to pay a large share of the cost, a possible violation of federal rules, the report stated.

In the report, Center for Medicare and Medicaid Services (CMS) officials said that they have begun to examine the practices of PFFS plans and intend to take action to ensure the plans follow agency guidance. CMS officials said that they do not have data on the number of Medicare beneficiaries enrolled in PFFS plans who have higher costs as a result of the practices, according to the report. The report called on CMS to investigative PFFS plans that require Medicare beneficiaries to inform them before they receive services and ensure that the plans follow agency guidance. 

The report also found that Medicare beneficiaries are more likely to leave PFFS plans than other private Medicare plans. According to the report, 21% of Medicare beneficiaries enrolled in PFFS plans decide to leave during the year, compared with 9% of those enrolled in other private Medicare plans. To view the GAO report go to http://www.gao.gov/products/GAO-09-25