Trump Signs Order Seeking Parity Between Fee-For-Service, Medicare Advantage Rates

President Trump on Thursday signed an executive order asking top federal officials to explore a wide variety of Medicare Advantage expansion efforts, including a call to more closely align the rates paid by MA plans and traditional fee-for-service Medicare.

Among the order’s provisions is a request for Department of Health and Human Services (HHS) secretary Alex Azar to produce a report that “identifies approaches to modify Medicare FFS payments to more closely reflect the prices paid for services in MA and the commercial insurance market, to encourage more robust price competition, and otherwise to inject market pricing into Medicare FFS reimbursement.”

The directive, titled “Executive Order on Protecting and Improving Medicare for Our Nation’s Seniors,” also compels Azar to develop policies that ensure fee-for-service Medicare “is not advantaged or promoted over MA with respect to its administration.”

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Though the president cannot unilaterally set Medicare payment rates, the move marks yet another step in his administration’s ongoing promotion of public-private Medicare Advantage plans as a central part of its health care policy goals.

“The MA component, for example, delivers efficient and value-based care through choice and private competition, and has improved aspects of the Medicare program that previously failed seniors,” the executive order’s introduction reads.

Medicare Advantage plans typically pay lower rates to skilled nursing providers than fee-for-service Medicare, while also enforcing shorter lengths of stay. Nationwide, traditional Medicare paid $525 per patient day on average in the second quarter of 2019, according to the most recent report from the National Investment Center for Seniors Housing & Care (NIC) — while MA plans reimbursed an average of $432.

The Centers for Medicare & Medicaid Services (CMS) projected that Medicare Advantage customers will account for about 40% of all Medicare beneficiaries in the 2020 plan year, which will also see private insurers offer 600 more MA plan options than the year before.

Elsewhere in the executive order, Trump asked for a study that would investigate the potential for additional shared savings and competitive bidding in fee-for-service Medicare, as well as the “use of MA-negotiated rates to set FFS Medicare rates.”

Trump signed the executive order at a rally-style event in The Villages, a sprawling active adult retirement community in central Florida. His remarks, as well as the executive order itself, were heavily critical of Democratic-sponsored plans to implement single-payer health care under the “Medicare for All” name.

A variety of candidates for the Democratic nomination have expressed support for various public health care expansion plans, with Sen. Bernie Sanders of Vermont most notably embracing a true “Medicare for All” model that would eliminate private health coverage in favor of a single, government-backed system.

This plan has drawn the ire of the president and conservatives who view such a strategy to extend Medicare, a social program administered by the government, as “socialism”; several news reports noted that the original title of the Thursday executive order was “Protecting Medicare from Socialist Destruction.”

“‘Medicare for All’ would take away the choices currently available within Medicare and centralize even more power in Washington, harming seniors and other Medicare beneficiaries,” the executive order reads in part.

The order also calls on HHS to expand coverage of telehealth services, encourage competition between different sites of care, and reduce various regulations.