November 8, 2019
The Honorable Alex Azar
Secretary
U.S. Department of Health and Human Services
200 Independence Avenue S.W.
Washington, D.C. 20201
RE: Executive Order (EO) entitled “Protecting and Improving Medicare for Our Nation’s Seniors”
Dear Secretary Azar,
The Alliance of Specialty Medicine (the “Alliance”) represents more than 100,000 specialty physicians
and is dedicated to the development of sound federal health care policy that fosters patient access to
the highest quality specialty care. The Alliance writes to share feedback to the agency as it works
toward implementing aspects of the Trump Administration’s Executive Order (EO) entitled “Protecting
and Improving Medicare for Our Nation’s Seniors.”
Medicare Advantage and Fee-for-Service
Among other things, the EO directs the Secretary of the Department of Health and Human Services
(HHS) to, within 180 days, submit to the President a report that identifies approaches to modify
Medicare fee-for-service (FFS) payments to more closely reflect the prices paid for services in Medicare
Advantage (MA) and the commercial insurance market, to encourage more robust price competition,
and inject market pricing into FFS reimbursement.
At present, MA payments are generally determined through a comparison of a plan’s estimated cost
(bid) and the maximum amount Medicare will pay a plan (benchmark). The benchmark is 95, 100, 107.5
or 115 percent of the FFS projected rate. Additional factors that influence MA payments include riskadjustment, coding intensity, and quality bonuses. In turn, MA plans directly contract and negotiate
reimbursement rates with healthcare providers, such as physicians. According to a recent study,
“[p]hysician reimbursement in MA was more strongly tied to [traditional Medicare (TM)] rates than
commercial prices, although MA plans tended to pay physicians less than TM [emphasis added].”
Another study from the Congressional Budget Office (CBO) shows average MA payments for the
professional component of select physician services are at or below Medicare FFS rates.
Read full letter here
