MedPAC Recommends FFS Benefit Changes

The commission's recommendations for benefit design include:

• Cap out-of-pocket beneficiary spending
• Implement deductibles for Part A and Part B services
• Replace coinsurance with copayments to enable beneficiaries to better anticipate their medical costs
• Add cost-sharing for supplemental insurance or so-called Medigap policies, which cover deductibles, coinsurance, and copayments.

The commission contends that although Medigap policies protect beneficiaries from unlimited out-of-pocket expenses, the additional coverage, which usually covers all or almost all of Medicare's cost-sharing requirements, reduces any incentive to avoid costly or unnecessary medical procedures.

The health insurance industry is already pushing back on additional Medigap charges, as well as caps on out-of-pocket costs. America's Health Insurance Plans, an industry trade group, released a poll that says 90% of seniors are satisfied with their existing Medigap coverage and 79% say their policy provides excellent or good value for the money. According to AHIP, Medigap policies had 9.8 million enrollees in 2011.

"Medigap coverage provides seniors with financial security and peace of mind about their health care coverage," said Karen Ignagni, president and CEO of AHIP, in a press statement.