PFFS plans were introduced for a variety of reasons, most importantly to offer choice to rural seniors and to offer a way for employers to enroll retirees scattered over the country. Without the confines of a network, seniors enrolled in PFFS plans could pay on a service by service basis and see whichever provider they wished, as long as the provider accepted PFFS payment terms. To make this option attractive for insurers to offer, CMS proposed “bids” that were over the average payment rate. These “overpayments” were intended to be temporary, to get the insurers in the rural markets, and over time to encourage the insurers to develop provider networks, or HMOs. In fact, 2010 is the final year PFFS plans will exist. So even if the government makes no cuts to the Medicare system in an effort to reduce spending, huge savings will be realized in 2011 Medicare Advantage costs, as PFFS overpayments expire.

It is not clear if in fact the insurers will offer HMOs in rural areas in 2011 when the PFFS plans go away. For example, in Maine and New Hampshire where Anthem Blue Cross is the dominant MA player,  MA plans are yet to be introduced. It may be that the rural provider community is too small to support Medicare HMOs where access is traded for benefits. Insurers may be forced to offer PPOs as an alternative option to PFFS plans-or drop MA coverage altogether. At the end of the day, MA plans-be them HMOs or PPOs-need to deliver high quality care at a savings or they will go the way of the dodo bird. We will know in 2011.

The demise of Medicare Advantage plans would merely change the contract that Medicare has with private insurers. For traditional Medicare, CMS pays the health plan a claim administration fee. For Medicare Advantage, CMS pays the insurance company a fixed fee for each enrollee, based on the age, gender, county of residence and health status of the enrollee. The insurance company then attempts to create a margin by savings on claims through various programs: excluding inefficient high cost providers from the network, medical case management, utilization review, etc.

The insurers can usually manage members at a very large savings, but then much of this savings is eaten up by the cost of acquiring members. A health plan’s average acquisition cost of a member is well over $1,000 and often as high as $1,500. If the member stays on the plan for a few years, the health plan can profit and Medicare saves money. If the member leaves after a year, the health plan loses money. As good government policy, CMS (and Congress) need to have consistent reimbursement to encourage health plans to invest in acquiring members. Unfortunately, the program has been marked by big swings in reimbursement.

This should not be a partisan issue. If the private sector can deliver a high quality efficient solution, we should want more of it. Government left to its own devices will use the clumsy lever of reducting provider fee schedules to save money. Providers just pass costs on to the private sector. Fortunately right now the government can rely on the private sector to pick up the tab. Did you ever wonder why medical trends in Medicare and Medicaid are in the single digits and the private sector is in the duoble digits? For my national health care enthusiasts, be careful what you wish for.

The report released on Saturday outlined the priorities for the two-year stimulus package which included health insurance coverage to the 8.5 million people who lost their jobs this past year. The $825 billion package of spending and tax cuts is a two-year plan that house Democrats have already begun working on.

Senate Version of Stimulus Package

The senate version of the stimulus package includes $149 billion in funds for health care. The package includes a provision that would extend Medicaid to families who have become ineligible because their incomes have increased at a cost of $1.3 billion over the next 10 years. The package also includes federal subsidies for 65% of the health insurance premiums under COBRA for 9months.

Another inclusion in the package is approximately $23 billion for health care information technology, whereas the House version is about $3 billion less at $20 billion.

House Version of Stimulus Package

The house version would allow states to expand their Medicaid programs to low-income, recently unemployed workers at a cost of approximately $9 billion through 2010. The house version of the package includes federal subsidies for 65% of the health insurance premiums under COBRA for one year. The house would also include in their version of the package, a provision that would allow recently unemployed workers ages 55 and older or those with at least 10 years of tenure at their jobs to continue to receive COBRA. They will receive COBRA until they find a job or reach 65 and are eligible for Medicare. The senate version does not include this provision.

“If we do not act boldly and swiftly, a bad situation could become dramatically worse,” Obama said on Saturday.

With the inauguration of president-elect Barack Obama nearing, many are concerned about his new health care policy. Tom Daschle, Secretary of Health and Human Services, backs Obama’s call for a new public health insurance plan to compete with private insurers such as Blue Cross Blue Shield, Aetna, and WellPoint.

Tom Daschle was welcomed with open arms at his confirmation hearing on Thursday. Both parties expressed much admiration to Daschle and are willing to do whatever it takes with him to help our country out of the health care rut it is in.

So what does he want to do when he gets into office? He wants wider insurance coverage, higher quality care, lower costs, more preventive care, more money for community health centers, greater use of information technology, an emphasis on keeping people well, a stronger Food and Drug Administration, and speedier approval of low-cost generic drugs according to the confirmation meeting yesterday.

Other issues he would like to address while in office are reducing the influence of politics at federal science agencies. He would also like to increase Medicare payments to family doctors and other primary care physicians and place more emphasis on the prevention of disease, rather than the treatment of it.

The United States have more of a chance of insuring everyone since Democrats have total control of the government. Because of the recession, the number of uninsured has grown which means that the total cost of insuring everyone will grow as well. Tom Daschle has been a huge part of the U.S. government for over 30 years. He knows what needs to be done and now as Secretary of Health and Human services, it is more likely to get done.

Best Commercial Health Plans: North

1.       Harvard Pilgrim Health Care:  Offers HMO and POS plans to members in Maine and Massachusetts. Earned 5 stars for Consumer assessment, prevention, and treatment and an overall score of 91.2

2.       Tufts Associated HMO: Offers HMO and POS plans to members in Massachusetts, New Hampshire, and Rhode Island. Earned 5 stars in Consumer Assessment, Prevention, and Treatment and overall score of 91.2

3. Harvard Pilgrim Health Care of New England: Offers HMO and POS plans to members in New Hampshire. Earned 5 stars in Consumer Assessment, Prevention, and Treatment and an overall score of 90.6

4. Geisinger Health Plan: Offers HMO and POS plans to members in Pennsylvania. Earned 5 stars in Consumer Assessment, Prevention, and Treatment and an overall score of 88.2

5. Health New England: Offers HMO and POS plans to members in Connecticut and Massachusetts. Earned 5 stars in Consumer Assessment, Prevention, and Treatment and an overall score of 88.1

Best Commercial Plans: South

1. Capital Health Plan: Offers HMO plans to members in Florida. Earned 4 stars in Consumer Assessment, 5 in Prevention, and 4 in Treatment and an overall score of 86.8

2. Kaiser Foundation Health Plan of Georgia: Offers HMO plans to members in Georgia. Earned 2 stars in Consumer Assessment, 5 in Prevention and Treatment and an overall score of 86.7

3. CIGNA HealthCare Mid-Atlantic: Offers HMO and POS plans to members in DC, Maryland, and Virginia. Earned 3 stars in Consumer Assessment, 4 stars in Prevention and Treatment and an overall score of 84.9

4. Optima Health Plan: Offers HMO and POS plans to members in Virginia. Earned 4 stars in Consumer Assessment, Prevention, and Treatment and an overall score of 84.9

5. Health First Health Plans: Offers HMO plans to members in Florida. Earned 4 stars in Consumer Assessment, Prevention, and Treatment and an overall score of 84.5

Best Commercial Plans: Midwest

1. Grand Valley Health Plan: Offers HMO plans to members in Michigan. Earned 4 stars in Consumer Assessment and Prevention, 5 in Treatment and an overall score of 89.1

2. Group Health Cooperative of South Central Wisconsin: Offers HMO plans to members in Wisconsin. Earned 3 stars in Consumer Assessment, 5 in Prevention and Treatment and an overall score of 87.8

3. Priority Health: Offers HMO plans to members in Michigan. Earned 5 stars in Consumer Assessment, 4 in Prevention and Treatment and an overall score of 87.2

4. Security Health Plan of Wisconsin: Offers HMO plans to members in Wisconsin. Earned 4 stars in Consumer Assessment and Prevention, 5 in Treatment and an overall score of 86.9

5. Unity Health Plans Insurance: Offers HMO and POS plans to members in Wisconsin. Earned 4 stars in Consumer Assessment and Prevention, 5 in Treatment and an overall score of 86.8

Best Health Plans: West

1. Kaiser Foundation Health Plan of Colorado: Offers HMO plans to members in Colorado. Earned 2 stars in Consumer Assessment, 4 in Prevention, 5 in Treatment and an overall score of 85.7

2. Kaiser Foundation Health Plan of Northern California: Offers HMO plans to members in California. Earned 2 stars in Consumer Assessment, 4 in Prevention, 5 in Treatment and an overall score of 85.3

3. Kaiser Foundation Health Plan of the Northwest: Offers HMO plans to members in Oregon and Washington. Earned 2 stars in Consumer Assessment, 3 in Prevention, 5 in Treatment and an overall score of 85.3

4. CIGNA HealthCare of Colorado: Offers HMO and POS plans to members in Colorado. Earned 3 stars in Consumer Assessment, 4 in Prevention and Treatment and an overall score of 83.9

5. Group Health Cooperative: Offers HMO plans to members in Idaho and Washington. Earned 3 stars in Consumer Assessment and Prevention, 4 in Treatment and an overall score of 83.1

America’s Best Commercial Health Plans Honor Roll

1.       Harvard Pilgrim Health Care: 91.2

2.       Tufts Associated HMO: 91.2

3.       Harvard Pilgrim Health Care of NE: 90.6

4.       Grand Valley Health Plan: 89.1

5.       Geisinger Health Plan: 88.2

6.       Health New England: 88.1

7.       Anthem BC/BS of CT: 87.8

8.       Group Health Cooperative of South Central WI: 87.8

9.       BC/BS of MA: 87.8

10.   CIGNA HealthCare of NH: 87.6

For the complete list, refer to the U.S. News & World Report website. The site also ranks best Medicare health plans as well as best Medicaid plans.