WASHINGTON - Ways and Means Committee Ranking Member Sander Levin (D-MI) today released a GAO report showing Special Needs Plans (SNPs) were more profitable than Medicare Advantage plans serving the general Medicare population.
“The GAO has found that Medicare Advantage Special Needs Plans are more profitable than the rest of Medicare Advantage," said Rep. Sander Levin. “We need a better understanding of why this is before the Congress enacts a permanent or long-term extension of the SNP program as part of any Medicare physician fix bill. As with all Medicare policy, we must make sure that the beneficiaries are getting the best care possible and Medicare is paying appropriately for this care."
Background:
Medicare Advantage (MA) plans are private health plans offered to Medicare beneficiaries. SNPs are MA plans that limit enrollment to beneficiaries in one of three classes of special needs: (1) beneficiaries dually eligible for Medicare and Medicaid; (2) beneficiaries with certain severe or disabling chronic conditions; or (3) residents of a nursing home or community residents who are nursing home certifiable. In contrast, general MA plans must allow all beneficiaries in a service area the opportunity to enroll.
Authority for SNPs expires at the end of 2015. Further extension will likely be considered as part of any larger Medicare physician fix and extenders bill.
What GAO Found:
* In 2011, Medicare payments to SNPs were higher than payments to other MA plans, even after accounting for health status differences,
* SNPs reported higher profit margins than MA plans available to all beneficiaries, with an average profit margin of 8.6 for SNPs versus 4.6 percent for other MA plans.
* This finding held true when analyzed by type of SNP, with profit margins of 8.4 percent for dual eligible SNPs (D-SNPs), 9.6 percent for chronic condition SNPs (C-SNPs), and 12.8 percent for institutional SNPs (I-SNPs).
* The finding that SNPs were more profitable than general MA plans also held true when analyzed by type of plan (HMO or PPO) or whether the plan was in a high or low benchmark area.
* SNPs also reported spending a lower percentage of total revenues on medical expenses, on average, than general MA plans, with an average medical loss ratio of 82.7 percent compared to 86.4 percent for general MA plans.
* This finding also held true regardless of the type of SNP, type of plan, or plan benchmark.
* Overall, 23 percent of SNP beneficiaries were enrolled in plans with profit margins of 15 percent or more, compared to 6 percent of beneficiaries enrolled in general MA plans.
