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Medicare Advantage Cuts Wrong Prescription for Improving Healthcare Efficiency

Robert Margolis, MD, and Craig Frances, MD, for HealthLeaders Media, July 17, 2009

Patients also report very high satisfaction ratings, are more likely to have a regular physician, are less likely to delay care due to cost, and are less apt to have difficulty accessing care than their fee-for-service counterparts.

The MA program also provides more benefits to beneficiaries overall—an average of $90 per member per month on average—in the form of reduced copays and deductibles compared with the fee-for-service system, and provides care to a higher proportion of vulnerable beneficiaries, including minorities and those of lower socioeconomic status.

Despite these facts, the Obama administration has targeted the MA program for reimbursement cuts, citing higher national MA costs than the fee-for-service system. These cuts will come directly out of the pockets of beneficiaries in the form of reduced benefits. These changes will encourage these currently satisfied members to rejoin the uncoordinated Medicare system with its rapidly escalating costs and its misaligned incentives, thus undermining the very incentives that have created coordinated care group practice. In addition, the mechanism proposed for the cuts does not account for the marked regional variation in relative costs between programs. In many counties, the MA system will be getting less than the fee-for-service system, despite increased benefits.

We are in the midst of a healthcare crisis partly due to the lack of appropriate incentives for providers to work together in truly integrated healthcare systems. Healthcare experts around the world tout coordinated care to be the single best way to improve quality. The Obama administration has acknowledged its importance and expressed a desire to implement mechanisms to effect care coordination.

However, there is no better system of care delivery than a fully integrated network of providers with a vested interest in delivering cost-effective, high-quality, and transparent healthcare. If our government takes the time to study the MA program, integrated delivery networks, and the best way to provide coordinated care, they will realize that the MA program is much closer to the cure than the disease for our ailing healthcare system.


Robert Margolis, MD, is the immediate past chairman of the board of the National Committee for Quality Assurance and is the CEO of HealthCare Partners, an integrated healthcare delivery system serving more than 600,000 patients across several states. Craig Frances, MD, served as chief medical resident at the University of California, San Francisco, has built several companies, and serves on the board of HealthCare Partners. They may be reached at RMargolis@healthcarepartners.com and cfrances@summitpartners.com, respectively.


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