AMA AND AARP PURSUE MEDICARE PFFS PLANS FOR DECEPTIVE MARKETING

Although private fee-for-service (PFFS) plans—private Medicare health plans that do not have provider networks—market to people with Medicare in rural areas with promises of reduced premiums and improved access to providers, they often impose higher cost-sharing and provide enrollees with an inadequate access to doctors and other providers, according to materials recently released by the American Medical Association (AMA) and AARP.

According to reports released in October by the AMA and AARP, of 8.9 million people with Medicare in private Medicare Advantage (MA) plans, 1.7 million are currently enrolled in PFFS plans, which provide outpatient services through any doctor willing to accept the plan, rather than through a network of providers.

The plans are fastest growing in rural areas, which have seen 412,623 new PFFS members in the past two years, in contrast to just 126,317 new members in other types of MA plans during the same two-year period.

While PFFS plans often market themselves to people with Medicare in rural America as low-premium plans with a more flexible provider network and additional preventive benefits, the AMA and AARP have found that access to health care in rural areas is often impeded by PFFS plan structures and benefit packages. According to AMA and AARP materials, PFFS plans are loosely managed and have poor care coordination capabilities. Many plans require preauthorization for care, delay payment or pay incorrect amounts for services. Companies offering PFFS products have been accused by consumer advocates of deceptively marketing to rural Americans, leaving many with coverage gaps and a weak health care safety net.

And while PFFS plans cost taxpayers more than either Original Medicare or Medicare HMOs, enrollees incur much higher cost-sharing responsibilities. According to a study by Mathematica Policy Research, Inc., funded by the AMA and AARP, all enrollees in MA plans spend on average $268 out of pocket, while those in PFFS plans spend $337. And for those with chronic illnesses, the difference is even more evident: those on Medicare Advantage plans spend $1,656 yearly, while those in PFFS plans spend $2,382.

As a result, the AMA and AARP have implemented a media campaign to “support congressional action to stop the next two years of Medicare [physician payment] cuts,” through implementing payment parity between MA plans and Original Medicare.

-From Medicare Watch, a biweekly electronic newsletter of the Medicare Rights Center, Vol. 10, No. 21: October 16, 2007.

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