Statement On MedPAC Report

Statement from Scott P. Serota, president and CEO, Blue Cross and Blue Shield Association

March 2, 2007

WASHINGTON – The analysis released today by the Medicare Payment Advisory Commission (MedPAC) is outdated because it fails to account for the billions of dollars in cuts that Medicare Advantage (MA) has already sustained.

MedPAC's report does not reflect the impact of the $6.5 billion in cuts approved by Congress that phase-in beginning this year.  These cuts are resulting in annual payment increases for MA plans that are 4 percent to 5 percent below growth in overall Medicare costs.  In 2007, MA payments will grow by only 1 percent, on average, while Medicare costs are growing 5-6 percent.

Further cuts, as recommended by MedPAC, would have dire consequences for a program highly valued by beneficiaries.  A recent survey from The Mellman Group shows that 97 percent of MA beneficiaries believe that Congress should maintain adequate funding for the program.

We urge Congress to reject MedPAC's recommendations to further cut this valuable program.  MA plans' reimbursement structure encourages a focus on prevention and care coordination - which are critical to managing the care of the vast majority of Medicare beneficiaries who have at lease one chronic condition.  Further cuts would be devastating for Medicare beneficiaries enrolled in the MA program and would result in premium increases, benefit reductions, and possibly, the loss of quality, coordinated care programs that MA provides.