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The November 2018 New England Journal of Medicine features a article by KFF’s Tricia Neuman and Gretchen Jacobson of the Kaiser Family Foundation (KFF) that “examine[s] the extent to which Medicare Advantage plans are achieving goals with respect to benefits, out-of-pocket costs, plan choice, federal spending and quality. They also highlight areas where more evidence is needed to understand the implications of rising Medicare Advantage enrollment for beneficiaries and the future of Medicare.”

The article also notes that “the emerging role of Medicare Advantage … is gradually changing the Medicare program in ways that have important implications for beneficiaries, providers, and spending.” Differences between Medicare Advantage (MA) and traditional Medicare “present opportunities and trade-offs for the 60 million people now on Medicare.”

Key findings in the article include:

  • Variation in quality of plans, lack of data, and “eye-brow raising disenrollment rates among higher-need patients appear to warrant attention and oversight.”
  • MA enrollees “appear to be somewhat healthier than beneficiaries in traditional Medicare, according to measures of self-assessed health, functional status, and cognitive status;”
  • While most MA enrollees “receive benefits not covered by traditional Medicare” as a result of Medicare payment policy, including rebate dollars, “[s]tudies suggest that the current rebate-based method may not be an economically efficient way of providing extra benefits to beneficiaries because plans are retaining a fairly large share of the rebate for administrative costs and profit, passing on to enrollees only 54% of the rebates, on average;”
  • Surprisingly little is known about how much Medicare Advantage enrollees pay out of pocket for the services they receive overall, across plans, according to health condition, or in comparison to beneficiaries in traditional Medicare;”
  • While there is variation in the number of plans available across the country, most prominently between urban and rural areas, the average beneficiary can choose among 21 plans. However “[c]hoosing among multiple [MA] plans can be a mixed bag for beneficiaries. Seniors have said that they value having a choice among plans but feel ill-equipped to compare benefits, cost-sharing, provider networks, and other plan features.”  As a result, the “large majority of [MA] enrollees stay in the same plan year after year, with just 10% switching plans every year;”
  • After many years of Medicare payments to MA plans being “considerably higher,” payment to MA plans today are “roughly equal to the per capita costs in traditional Medicare (101% of those costs, on average)” but “some questions remain as to whether the current system is putting sufficient downward pressure on program spending and encouraging plan efficiency” (including incentives that promote, e.g., plan choice and extra benefits at the expense of Medicare savings);
  • “Current methods that are used to compare [MA] payments with traditional Medicare costs may overstate the true costs to plans or provider Medicare benefits” for example, the current risk-adjustment system may allow MA plans to “boost[..] their payments by as much as 2% (on average) in 2018, on the basis of how they code their enrollees’ health conditions;”
  • MA plans “tend to score better than traditional Medicare on some quality metrics, but the results are mixed and data are limited;”  while MA plans “generally score better … on preventive services and screening measures” and “appear to use post-acute care less intensely with better outcomes … [s]omewhat counterintuitively, there seems to be no difference between Medicare and [MA] plans with respect to care coordination, receipt of needed prescriptions by beneficiaries, and adherence rates for diabetes and cholesterol medications.”
  • Little is known about the quality of care for [MA] enrollees with serious illnesses” but “[s]everal studies have flagged concerns about the quality of care received by high-need, high-cost enrollees, on the basis of disenrollment rates and other measures.”
  • Some evidence suggests Medicare Advantage enrollees are more likely than beneficiaries in traditional Medicare to be discharged to poorly rated skilled nursing facilities.”

The discussion portion of the article makes some critical observations with respect to what policymakers – and the public – may have to confront regarding the future of the Medicare program and the role of Medicare Advantage. Assuming MA enrollment continues to grow, “the Medicare of tomorrow could look much different than it does today – more like a marketplace of private plans, with a backup public plan, and less like a national insurance program.”  With respect to federal financing, the authors note that “[t]he current payment environment that attracts insurers and provides extra benefits to enrollees comes as a cost to taxpayers and may reemerge as an issue down the road, when federal spending becomes a more pressing policy concern.”

As noted earlier in the article, “[w]ithout much fanfare, Medicare has evolved into a program that provides benefits that are more generous to beneficiaries in [MA] plans than to their counterparts in traditional Medicare.” To this point, the authors highlight the “equity issue that arises from providing stronger financial protections, with an out-of-pocket limit, for beneficiaries in [MA] than in traditional Medicare.”

If policymakers choose to confront “the growing role of private insurance in Medicare, and the diminishing role of traditional Medicare” they would be wise to consider many of the policy proposals raised (but not necessarily endorsed) in the article, including adding an out-of-pocket cap in traditional Medicare, standardizing MA benefits to make it easier for consumers to compare plans, making consumer support tools more user-friendly, increasing funding for Medicare counseling, reforming plan payments (including plan bonuses and rebates) and requiring additional oversight regarding quality and health outcomes, particularly with respect to sicker enrollees.

The Center for Medicare Advocacy urges policymakers to take action informed by this important article in order to preserve traditional Medicare, and serve all Medicare beneficiaries equally.

November 29, 2018 – D. Lipschutz

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