WASHINGTON, July 11, 2007 -- The American Medical Association renews its call for fiscal neutrality between Medicare Advantage and traditional Medicare, pointing out the gross inequity in payments between the two Medicare programs.

"Right now the government is paying health insurance plans that administer Medicare Advantage, on average, 12 percent more per person than it spends on patients enrolled in traditional Medicare," said AMA Board Member Cecil Wilson, MD. "With Medicare payments to doctors who care for seniors slated for a 10 percent cut next year, Congress must put the money used to subsidize the insurance industry to better use."

At the AMA's Annual Meeting late last month, America's physicians sent a resounding message to Congress - eliminate the Medicare Advantage subsidy. AMA policy clearly states that subsidies to private plans offering alternative coverage to Medicare beneficiaries should be eliminated, and that these private Medicare plans should compete with the regular Medicare program on a fiscally neutral basis.

"While groups that truly represent physicians fight to preserve all seniors' access to health care by stopping Medicare physician payment cuts, the insurance industry and its partners are solely focused on preserving their $65 billion government subsidy," said Dr. Wilson.

A report by the California Association of Physician Groups (CAPG), which represents some medical groups practicing in the managed care model, offers no conclusive reason why the government should continue overpaying Medicare Advantage plans. The CAPG report states that Medicare Advantage incentivizes California physician groups to provide proactive care, and gives an example of greater outreach for flu and pneumonia vaccinations. By that logic, California with its 35 percent of patients enrolled in Medicare Advantage plans, should have above average vaccination rates.

However, the most recent CDC data clearly show that adults aged 65+ in California receive flu shots in line with the national average. For the pneumonia vaccination, the number actually drops below the national average. In Maine - which has only 2 percent of Medicare patients enrolled in Medicare Advantage - the percentage of seniors who received both the flu and pneumonia vaccination is actually higher than in California.

"Eight in ten of America's seniors are enrolled in the traditional Medicare program," said Dr. Wilson. "Congress needs to do what's right for seniors by stopping harsh Medicare cuts to physicians that will make it very hard for physicians to care for new Medicare patients. The most viable way to do that is to level the playing field by eliminating the Medicare Advantage overpayment."