This is the latest request from MedPac and with trying to equal out what is being paid out. Reports like this normally send panic to those who are participants in the Advantage plans. From one side of the coin there are many pharmacy benefit managers and insurance HMO type of companies making a lot of money from handling only Medicare Advantage plans. 
Today, coincidentally, Medicare suspended marketing and adding new members to an insurance company for failure to provide services and adding extra imposing therapy authorization requirements not approved by CMS.
Medicare Suspends Marketing and Enrollment for Fox Insurance Program Drug Plan
I was speaking the other day with a physician’s group who sees a mix of both commercial insured patients and Medicare Part D. It was interesting to hear that the profits made from the Medicare Advantage plans were negated by the loss on the commercial insured clients, in other words those with normal health insurance via employers or on private plans.
Bravo Health – Venture Capital Backed Medicare Senior Health HMO Carrier Sees Profits of 1 Billion for 2009
This is why we are seeing many health care companies who specialize and cover Advantage plans only. This does make a statement as to the difference in compensation payments and there does seem to be some type of room for adjustment.
Back when the Advantage plans were started the government did not have the in house organization with infrastructure to create the HMO type of service, thus it was easier to use commercial carriers versus setting up a government operation of a type D plan. The plans have been helpful in affording seniors the ability to get drugs as a reasonable cost, but many are finding those costs increasing as well. When you see pharmacy benefit managers make profits like shown below, it does make one begin to wonder where does all the money go as seniors just due to age have more medications than someone of the age 20-50. so much of the profits would also indicate to be coming from Advantage plans as well.
Medco Health Solutions $14.8 Billion 3rd Quarter Profit – Automation Is Part of Their Solution
Express Scripts Cash Reserves Increased to Almost 4 Billion This Year – Pharmacy Benefit Management
This goes to show that big profits are being made at the cost of the US Government, so it certainly appears there is some kind of room here, either that or Medicare could stand to design and run their own similar benefit plan, and be given the ability to negotiate the price of drugs. As it stands now, Medicare cannot negotiate directly with drug companies and that in itself seems to be something that should be explored as well. BD
WASHINGTON, March 1 (Reuters) - Medicare should cut U.S. government payments to private insurers and home healthcare providers, an advisory panel said in nonbinding recommendations released on Monday.
The Medicare Payment Advisory Commission, or MedPac, repeated its earlier call for the federal government to pay private insurers that offer coverage known as Medicare Advantage the same as it pays when Medicare reimburses providers directly.
The commission "remains concerned that Medicare's payments to (Medicare Advantage) plans will again exceed" Medicare's fee-for-service program, a statement from the panel said.
MedPac is an independent body that makes nonbinding recommendations to Congress on Medicare, the federal health insurance plan for nearly 44 million elderly and disabled Americans.
Congress is considering cuts to Medicare Advantage and other sectors as part of the stalled healthcare reform legislation. President Barack Obama is set to announce this week how he wants Democrats to proceed on the measure. The report was posted here.
UPDATE 1-U.S. Medicare panel urges insurer payment cuts | Reuters
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