Paul Ryan: Medicare Advantage is the Future of Medicare, and Medicaid Reform Will Return

Public-private partnerships will form the basis of comprehensive Medicare reform as the baby boom population ages, former Speaker of the House Paul Ryan predicted Thursday morning in remarks at a major skilled nursing and senior housing industry conference.

“I believe the future for Medicare is in the Medicare Advantage type of space,” Ryan, a Wisconsin Republican, said during a keynote discussion at the National Investment Center for Seniors Housing & Care’s (NIC) spring conference in San Diego.

Ryan, who left office in January after declining to run for re-election, lauded Medicare Advantage plans as a way to stave off potential financial disaster to the Medicare program, which will see a projected trust fund insolvency by 2026.

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“The nucleus of the system is the patient. It’s the consumer,” Ryan said during his first public speaking engagement since handing the gavel to current Speaker Nancy Pelosi. “And the providers — in this case, insurers — compete against each other for that person’s business.”

Medicare Advantage plans bridge the gap between public and private coverage, with private insurance companies offering certain benefits to Medicare-eligible seniors and receiving federal reimbursements for the services. About 34% of all seniors have enrolled in the plans, with the Congressional Budget Office predicting penetration of 42% by 2028.

For seniors, the plans provide certain discrete benefits, including expanded coverage for catastrophic incidents and lower co-payment burdens. But for skilled nursing providers, Medicare Advantage has caused serious headaches: Because private companies run the plans, they tend to be more cost-conscious than traditional fee-for-service Medicare, pushing for shorter lengths of stay at nursing homes and providing lower per-day reimbursements. In the third quarter of 2018, for instance, operators reported average Medicare reimbursements of $515 per day, according to NIC’s quarterly occupancy report, compared to $426 for managed Medicare.

But Ryan painted these changes as necessary to the health of both the government’s finances and individual residents, calling traditional fee-for-service Medicare “the jalopy of the 21st century.”

“It saves money and it helps patients get better health outcomes,” Ryan said. “I really think that’s going to be the future of Medicare.”

Without a significant overhaul to focus more on Medicare Advantage-style solutions, Ryan said, the government will have to resort to “screw-tightening” the current fee-for-service model — an option that he didn’t paint as particularly viable.

“Fee for service doesn’t work,” he said. “That’s why you have to go to a value-based system, which is what Medicare Advantage and premium support is attempting to do.”

Medicaid headaches to return?

As speaker, Ryan oversaw repeated efforts by Congressional Republicans to repeal the Affordable Care Act and cut federal spending on benefit programs, including a serious push in the summer of 2017 to shift Medicaid to a block grant program — a move that many in the skilled nursing industry feared could devastate reimbursements by cutting up to $800 billion in Medicaid funding.

Medicaid covers about 62% of all nursing home residents, according to a 2017 study by the Kaiser Family Foundation, and industry advocates were successful in convincing lawmakers and the public that the program forms a vital lifeline for millions of vulnerable seniors.

When asked about that fight by moderator John Kelliher, managing director of advisory firm Berkeley Research Group, Ryan emphasized that he and his fellow Republicans listened to objections from the American Health Care Association and other trade groups by carving out separate per-capita structures for older beneficiaries and those with disabilities.

And while that attempt at comprehensive Medicaid reform failed by a single vote — cast in dramatic fashion by then-Sen. John McCain — Ryan predicted that the fight will return over the coming years. The Trump administration has reportedly mulled taking executive action to shift Medicaid to a block-grant system, and Ryan emphasized that the industry can’t stay quiet about the importance of the program to their bottom lines and the health of seniors.

“You’re going to have to keep telling that story over and over again,” he said.

He also expressed support for managed Medicaid programs, positioning the public-private reimagining of the system as a way to make it more equitable; while practitioners may be wary of accepting Medicaid due to its perception as program for low-income adults, Ryan asserted, providers would be more willing to accept a patient with a Medicaid plan from a name brand such as UnitedHealthcare.

The former speaker additionally took the opportunity to criticize liberal Democrats who have called for expanded government health care benefits.

“That would just drive them into the dirt,” Ryan said of government payers.

PDPM praise

Ryan briefly hinted at the Patient-Driven Payment Model — the new Medicare reimbursement system set to take effect in October — during comments praising Centers for Medicare & Medicaid Services (CMS) administrator Seema Verma and Department of Health and Human Services (HHS) secretary Alex Azar’s commitment to moving toward value-based care.

“There’s work to be done to improve it, but we’re clearly heading in that direction, and it’s obviously the way to go,” he said of PDPM and other value-based models.

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