Payment reduction and medicare private fee-for-service plans

Austin B. Frakt, Steven D. Pizer, Roger Feldman

Research output: Contribution to journalArticle

9 Scopus citations

Abstract

Medicare private fee-for-service (PFFS) plans are paid like other Medicare Advantage (MA) plans but are exempt from many MA requirements. Recently, Congress set average payments well above the costs of traditional fee-for-service (FFS) Medicare, inducing dramatic increases in PFFS plan enrollment. This has significant implications for Medicare's budget, provoking calls for policy change. We predict the effect of proposals to cut PFFS payments on PFFS plan participation and enrollment. We find that small reductions in payment rates would reduce PFFS participation and enrollment; if Congress reduces payments to traditional FFS levels it would cause the vast majority (85 percent) of PFFS plans to exit the market.

Original languageEnglish (US)
Pages (from-to)15-24
Number of pages10
JournalHealth Care Financing Review
Volume30
Issue number3
StatePublished - Mar 1 2009

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