FOR IMMEDIATE RELEASE, Wednesday, April 25, 2007
CONTACT: Yoni Cohen, (202) 225-3202

WASHINGTON, D.C. -- In today’s Ways and Means Health Subcommittee hearing on the 2007 Medicare Trustees report, Centers for Medicare & Medicaid Services Actuary Rick Foster made several important statements:

** Foster said that overpayments to private Medicare Advantage (MA)
plans shorten the solvency of the Part A Trust Fund.

“If we set the benchmarks [for MA plans] at the fee-for-service level,
that would reduce Part A payments to Medicare Advantage plans just like
Part B payments. We’ve estimated that would extend the insolvency date
for about two years."

** He also indicated that overpayments increase premiums for all 44
million seniors and people with disabilities – even though more than 80
percent of Medicare beneficiaries are not enrolled in private plans.

“The additional payments to Medicare Advantage plans above and beyond
what fee-for-service costs would have been adds about two dollars per
month to the standard Part B premium.”

** The CMS Actuary said that MA plans will never save Medicare money.

“We don’t see any change under current law, in that regard. The degree
[of Medicare Advantage payments] would change, but it would remain
higher than fee-for-service.”

** Foster also stated that hitting the “45 percent trigger” does not
mean there is a crisis with the Medicare Trust Funds.

“The ‘Medicare Funding Warning’ should not be interpreted as indicating
that Trust Fund financing is inadequate.”

** When asked if the 45 percent trigger is arbitrary, he admitted it is
not scientific.

“It is judgmental, it is not scientific.”

** Finally, Foster speculated that the 2007 Trustees report would not
have triggered the “Medicare Finance Warning” had payment rates between
traditional fee-for-service Medicare and Medicare Advantage plans been
equalized.

“We might have stayed below the 45 percent. Because in 2013 in the
projection, we are only slightly above the 45 percent threshold, it is
my guess that the lower payments [to Medicare Advantage plans], if the
law were changed in that would way, would reduce us below that threshold
for 2013.”