Tag Archives: Medicare Advantage

PNHP’s New Report on Medicare Advantage’s Equity Illusion

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Physicians for a National Health Program (PNHP) — in collaboration with Johns Hopkins University researchers — just released a report titled “No Real Choices: How Medicare Advantage Fails Seniors of Color”. It confirms that the handover of public programs like Medicare Advantage (MA) to Big Insurance doesn’t close racial, ethnic and economic health gaps — it deepens them.

Read Physician for a National Health Program’s report, No Real Choices: How Medicare Advantage Fails Seniors of Color, here.

PNHP’s researchers found that communities of color are being steered into MA plans not because they’re better — but because they’re cheaper upfront. This dynamic, dubbed the “Gap Trap,” means that affordability is driving people into coverage that often denies care, delays treatment and locks them into narrow networks.

“Medicare Advantage squanders billions, harms seniors and exacerbates racial inequities,” Dr. Diljeet K. Singh, gynecologic oncologist and president of Physicians for a National Health Program, said. “Americans need universal health Care which removes profit-motivated conflicts of interest, abolishes co-pays and deductibles, ends prior authorization burdens and guarantees protection from medical bankruptcy.”

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Medicare Advantage is the health care equivalent of the subprime mortgage crisis — except the fine print here is costing Americans’ lives and depleting the Medicare Trust Fund.

The equity illusion

When Big Insurance boasts about “diverse” enrollment in MA, this report reminds us: “Diversity” is often just a buzzword used for PR reasons and has nothing to do with seniors receiving the care they deserve — especially when it is used as cover for a business model that profits from inequity.

The PNHP report finds:

  • Black, Hispanic and Asian/Asian-American beneficiaries are disproportionately concentrated in MA plans that score lowest on quality ratings, while white beneficiaries are more likely to live in counties served by higher-quality plans.
  • One study found that MA prior authorization requests were denied 23% of the time for Black seniors vs. 15% for their white counterparts.
  • Despite industry claims to the contrary, racial and ethnic health disparities in the United States are not being reduced by Medicare Advantage.
  • Studies show that Black enrollees are more likely than white enrollees to choose a 5-star MA plan when offered one. They’re just not offered them as often.
  • Racial minority enrollees in MA suffer from worse clinical outcomes and face barriers accessing best quality care because of restrictive networks and misaligned financial incentives. Black MA enrollees experience higher rates of hospital readmission compared to their white peers.
  • The MA paperwork burden is driving doctors out of practice, worsening access for everyone — but especially in already underserved communities.
  • MA’s restrictive payment practices aren’t just harming patients — they’re pushing hospitals, especially those serving rural and minority communities, toward the edge of closure. Under-payment or delay of claims by MA insurers causes cascading financial harm in these vulnerable systems.

The big picture

As a reminder, even with the racial and ethnic issues aside, Medicare Advantage already severely restricts seniors’ access to providers, imposes unnecessary prior authorization hurdles that often result in deadly delays and denials — and cost taxpayers at least $84 billion more each year than original Medicare. Meanwhile, original, traditional Medicare does not even have networks; almost all doctors participate and few treatments are subject to prior authorization.

PNHP’s report shows that despite insurers’ endless “health equity” pledges and glossy diversity campaigns, MA remains a rigged game that leaves millions of seniors — disproportionately people of color — with worse access, inferior care and fewer real choices.

Big Insurance’s MA plans are shaped by the same market incentives that have long rewarded exclusion and sorting risk, and – if history tells us anything – sorting has always leaned on racial dimensions. As the report sums it up:

“Regardless of the reasons, any system that traps and harms people — particularly in ways that map onto centuries of racial injustice — cannot be a solution to health inequity.”

Getting Distracted by the Politics of Healthcare

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A number of interactions over the past two weeks have convinced me that the political debate over M4A in Congress, amplified by Presidential candidates jockeying for favor with primary voters, is beginning to seriously spook executives across healthcare.

At a health system board meeting in the Southwest last week, a number of physician leaders and board members had questions about the possible timing and dimensions of a shift to “single payer”, clearly convinced that M4A is an inevitability if Democrats take over in 2020. And two separate inbound calls this week, one from the CEO of a regional health system, and the other from a health plan executive, were both sparked by the hearings on M4A in Congress.

Again, the implicit assumption in their questions about timing and impact was the same: M4A, or something like it, is sure to happen if the 2020 elections favors Democrats. My response to all of them: keep an eye on the politics, but don’t get overly distracted. There’s little chance that “single payer” healthcare will come to the US—industry lobbies are simply too powerful to let that happen.

Even if Democrats do win the Senate and the White House in 2020, they’ll have to “govern to the center” to hold onto their majorities, and any major policy shifts will have to be negotiated across the various interests involved. Most likely: measures to strengthen provisions of the ACA, and perhaps a “public option” in the ACA exchanges.

As to Medicare expansion, I believe the most we’d see in a Democratic administration would be a compromise allowing 55- to 65-year-olds to buy into Medicare Advantage plans.

But for now, M4A’s biggest risk to hospitals and doctors is that it becomes a paralyzing distraction, keeping provider organizations from making the strategic and operational changes needed to re-orient care delivery around value.

Regardless of the politics, a focus on delivering value to the consumers of care will prove to be a no-regrets position for providers.

Health Insurance Enrollment Trends for Year-End 2018

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https://www.markfarrah.com/mfa-briefs/health-insurance-enrollment-trends-for-year-end-2018/

Mark Farrah Associates (MFA) assessed the latest year-over-year enrollment trends, comparing fourth quarter 2017 with fourth quarter 2018 segment membership based on data filed in statutory financial reports from the NAIC (National Association of Insurance Commissioners) and the CA DMHC (California Department of Managed Health Care).  As of December 31, 2018, almost 265.2 million people received medical coverage from U.S. health insurers.  This number is down from 265.6 million, or approximately 428,000 members, from a year ago. Year-end enrollment trends indicate membership gains for Medicare Advantage (MA) and Employer Group administrative services only (ASO) business while the managed Medicaid market, Individual, and Employer Group Risk segments experienced year-over-year declines.

Segment by Segment Enrollment Trends

As of December 31, 2018, the Individual segment lost over 1.0 million members year-over-year (YOY) and the Employer Group Risk segment, including Federal Employees Health Benefit Plans (FEHBP) business, experienced a decline of approximately 897,000 members. The Employer Group ASO segment persisted as the largest source of coverage in the industry, enrolling nearly 121.6 million people. Medicare Advantage experienced moderate growth in membership as over 736,000 more seniors chose an MA plan YOY.  Managed Medicaid saw a slight decrease YOY, by more than 36,000 members.  A more in-depth look at each segment follows.

  • The Individual segment experienced a significant decline of 6.7% from 15.5 million in December 2017 to 14.5 million in December 2018. Some factors that have led to a decrease in the individual market include increased costs for providers, increased premiums for members, and the repeal of the Affordable Care Act’s (ACAs) individual mandate.
  • Managed Medicaid membership marginally declined by 0.1%, or approximately 36,000 enrollees between December 31, 2017 and December 31, 2018.  Despite the decline in membership, Medicaid continues to be the largest government-sponsored health program in the United States, measured by enrollment.
  • Medicare Advantage (MA) enrollment increased from 20.7 million as of December 31, 2017 to 21.4 million at year-end 2018 according to plan-reported statutory reports. The MA segment remained the segment leader in terms of percentage increases – consistently growing YOY.

 

 

  • Employer Group Risk membership, including Federal Employees Health Benefit Plans (FEHBP) membership, experienced a 1.5% decline between 4Q17 and 4Q18. This equates to a segment decrease of over 897,000 as more employers continue to shift towards self-funded (ASO) insurance for their employees.
  • Employer group ASO (administrative services only for self-funded business) membership grew by over 814,000 members from December 2017 to December 2018.  YOY, the increase was 0.7%, nearly offsetting the decrease in the Employer Group Risk decline at a one-to-one ratio.  MFA identified 121.6 million ASO covered lives, which encompassed 46% of total health enrollment by segment for 4Q18.

Conclusion

As of December 31, 2018, almost 265.2 million people received medical coverage from U.S. health insurers, down approximately 428,000 members from a year ago. Year-end enrollment trends indicate membership declines for a majority of the health care segments. Health care will continue to be subjected to regulatory and political pressure as the upcoming presidential election approaches.

The Individual market continues to be the most volatile health care segment. Repealing the ACA remains a controversial topic that is gaining steam as 2020 swiftly approaches. While there has yet to be a popular front runner in terms of a conservative replacement plan, Medicare for All is a progressive replacement plan that aims for public sector health insurance.  In addition, managed Medicaid has expanded under the ACA but recently work requirements have gained popularity. Managed Medicaid work requirement waivers have already been approved or are currently pending in 15 states. Currently, 37 states including the District of Columbia have chosen to expand their Medicaid programs. Although Montana is counted in the 37 expanded states, a bill is currently being discussed that would extend the current expansion cutoff date past June 30, 2019.

 

About the Data

The data used in this analysis brief was obtained from Mark Farrah Associates’ Health Coverage Portal™ database. It is important to note that MFA estimated fourth quarter 2018 enrollment for a small number of health plans that are required to report quarterly enrollment but hadn’t yet filed.  Employer group ASO figures may be estimated by Mark Farrah Associates using credible company and industry resources.  Individual, Non-Group membership reported by some carriers may include CHIP (Children’s Health Insurance Program).

These adjustments may have resulted in moderate understatement or overstatement of enrollment changes by segment. Findings reflect enrollment reported by carriers with business in the U.S. and U.S. territories.  Data sources include NAIC (National Association of Insurance Commissioners) and the CA DMHC (California Department of Managed Health Care).  As always, MFA will continue to report on important plan performance and competitive shifts across all segments.

 

About Mark Farrah Associates (MFA)

Mark Farrah Associates (MFA) is a leading data aggregator and publisher providing health plan market data and analysis tools for the healthcare industry.  Our product portfolio includes Health Coverage Portal™, County Health Coverage™, Medicare Business Online™, Medicare Benefits Analyzer™, and Health Plans USA™.  For more information about these products, refer to the informational videos and brochures available under the Our Products section of the website or call 724-338-4100.

Healthcare Business Strategy is a FREE monthly brief that presents analysis of important issues and developments affecting healthcare business today.  If you would like to be added to our email distribution list, please submit your email to the “Subscribe to MFA Briefs” section at the bottom of this page. 

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Truth #5 – Costs To Operate Medicare Are Not Lower Than Private Insurance Plans

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By Denny Weinberg

Another favorite topic at the heart of the US healthcare debate is whether governments can run health insurance programs at lower operating costs than private insurance companies.

Two Sides Square Off

Private Industry Supporters: Some argue that governments regularly prove incompetent running large complex operations at a low costs. Regularly cited is the US mail system and the VA; more locally, public schools and DMV’s. And in the case of Medicare and Medicaid, something about these programs appears to set up a breeding ground for costly fraud and theft, they might argue. Finally, this group argues that competition inherently creates innovation, productivity and lower unit operating costs, something that does not naturally occur with government programs.

Government Supporters: On the other side, many argue that the sheer scale of a single program like Medicare creates consistency and low unit costs, the result of economies of scale. Further, that by extending that program to even more Americans, those scale economies will improve more. This group argues that the profit motive of private companies can only result in higher costs, not lower, enriching investors and executives.

What Do The Numbers Say?

As I researched this point, I found that cost effectiveness arguments between Medicare and Private Insurance is an old one, with each side pretty dug in. But there are some important themes associated with the underlying math.

Comparing Costs vs Percentages:

Government program supporters like to compare operating costs using percentages. The common percentage used is “operating cost as a percent of medical services”. They Argue that Medicare costs only about 2%-3% of the costs of medical services paid. They will further argue that private health plan costs are, by comparison anywhere from 10% to 25% of the costs of medical services they pay. Their conclusion is, “Medicare has far lower operating costs, and is therefore the much more efficient program.”

Private market supporters dispute this “percentage comparison”, and instead look at “operating costs $’s per capita” and compare those. They argue that when compared in this $ per capita measure, monthly Medicare operational costs are well over $100 per capita, while monthly private insurance cost of operations are well less than $100 per capita. Their conclusion is, “Private market providers have far lower operating costs, and are therefore much more efficient than Medicare”.

Why Is This Comparison Of Operating Costs of Medicare and the Private Market So Difficult?

1) As much as 50% of all US healthcare occurs in the last few months of a person’s life. This dynamic is a major driver of Medicare Coverage and its operating costs. It is far less of a driver of private healthcare coverage for younger and mostly working Americans and the related operating costs, confusing the comparisons.

2) Many diseases of aging are much more common in Medicare than in private health coverages. The most expensive is Kidney Care, and ultimately transplant or Dialysis, (which has its own category in Medicare). Beyond that, Cancers, Heart Disease, Dementia/Alzheimer’s and others are far more significant drivers of continuing costs for those covered by Medicare than those on private insurance coverages at younger ages, confusing the comparisons.

3) Workplace related coverages more often coordinate coverage with workers compensation, or even car and homeowners insurance coverages than those with Medicare Coverages. This produces different operating costs and medical coverages under the private health coverages, confusing the comparisons.

4) Private Insurance coverages are or have been subject to significant state Premium Taxes and other health care related state and federal taxes. These are often categorized as “Operating Costs” in comparisons, confusing the comparisons.

5) Some comparisons don’t capture all government expenses that support the Medicare program, perhaps to advantage this argument. Examples of services performed for Medicare by other parts of the government that aren’t accounted for: The Social Security Administration collects premiums, the Internal Revenue Service collects taxes for the program, the F.B.I. provides fraud prevention services, and at least seven other federal agencies and departments also do work that benefits Medicare, confusing the comparisons.

6) As pointed out in previous installments, a large and rapidly increasing portion of the Medicare eligible population opts out of traditional Medicare and purchases a Private Plan alternative from private companies. This is now approximately 40%. Operating costs are imbedded in the coverage price and not easily separated for purposes of comparison any longer, confusing the comparisons.

Conclusion?

As some of this discussion indicates, it is nearly impossible to formulate a clear comparison between Medicare operating costs and “the private market”. However, it also appears unlikely that the original Medicare Program administration, when properly compared, is more efficient than the highly competitive private market. That market now provides many low price, high value alternatives for rapidly growing number of Medicare eligibles. It is those same private market players who provide specialized solutions for younger and more often working American families at lower per capita costs than the Medicare Program, the measure that this writer is moved to support.

 

 

Truth #4; Medicare-For-All; Elected Officials and Government Employees Will Lead?

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To our elected officials and government workers re: Medicare-For-All. “If it’s so great, why aren’t YOU part of the Medicare program today?”

Lets take a quick look at who these government workers are and to what extent they have been the leaders in single payer programs so far.

Federal Government Workers

There are roughly 2 million federal workers in the US today. They and their families participate in a health benefits program created in 1960 just for them (the FEHBP). Interestingly, the FEHBP is not a government run single payer system, but arguably, the opposite. It’s a mostly open marketplace to over 200 private market HMO, PPO and other options from nearly every Blue Cross/Blue Shield plan and many other local and major managed care companies such as Aetna, Humana and United HealthCare.

When federal workers reach age 65, most choose continuing their FEHBP alternative, because it offers great local and national private options that are just a better deal than the single payer Medicare option. Once they actually do retire, workers can continue to choose to apply their Medicare subsidies to alternatives to Medicare that I have talked about in previous posts from the same private insurance company vendors they currently have, with little disruption.

State and Local Government Workers

There are roughly 4.5 Mil workers of each of the states, with coverage structures as varied as the number of states. Beyond that, another 14 Mil workers are associated with local governments, cities and counties and their health coverages even more varied.

Virtually all have unique programs providing multiple PPO and HMO and other coverages from a variety of private health insurance vendors. Those workers over ages 65, typically remain with those private health plans just as they did when they were younger. For retirees, today often older than age 65, the options are too varied for this article. But suffice it to say, they too have many private market alternatives or wraparound options to the Traditional Medicare program, and many opt for those.

Medicare-For-All; Will Federal, State and Local Government Workers Lead The Way?

So government workers and retirees participate in private insurance programs in much the same way way as the rest of us. As such, it would appear that if Medicare were “switched on” as the sole solution for health care coverage, all these government workers would be as impacted as everyone else, and might have similar responses, both positive and negative.

It seems that time and political realities will indicate whether government workers themselves would support a single source for their health care options, defined by the government, without the benefit of private market wrap-arounds or alternatives.

 

 

 

Truth #3: Medicare is Not “Free”

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by Denny Weinberg

Someone Is Paying For The Whole Thing, You Know

The “Free-ness” of Medicare, like many other commodities, comes down to two important metrics discussed here; Cost, and Price.

Cost:

  • Costs for Medicare include all payments to hospitals, doctors, pharmacies, labs, imaging centers, etc.
  • Costs for Medicare also include amounts paid to 12 private companies contracted regionally to manage and administer the Medicare Program. (i.e. claims, payments, providers, appeals, inquiries, education, medical records, etc). These critical administrative functions have been outsourced to the insurance industry and its affiliates for many years.
  • Finally, Medicare costs include payments to dozens of private insurance companies who provide private alternatives to Medicare, such as Medicare Advantage PPO’s and HMO’s.

Price:

  • Current projections are that Medicare costs will increase about 5% per year and prices will have to increase much more than that to keep the program from insolvency in the next few years.
  • Most adult Americans (including many that are also beneficiaries) pay varying portions of this price through special taxes, depending upon their type and amount of income.
  • If a Medicare beneficiary has also chosen to take Social Security income (most do), varying portions of that price are mandatorily deducted from that Social Security income as well, automatically.

So What Does It Really Cost and How Much Is The Real Price?

In 2017, the Medicare program made over $700 Billion in Payments to private insurance administrators and care providers for Traditional Medicare or for alternatives (Medicare Advantage). That year, about 58 Mil beneficiaries were enrolled in the program. The result is a cost for each Beneficiary of just over $1,000 per month. In 2019 that cost and related price will both be higher due to inflation.

But the beneficiary share of that price also varies widely based upon several factors. Those include income, the number of qualifying years of employment and whether Part B or Part D (coverage for Doctors and Prescriptions) is chosen or waived. (This will be further offset by the amount [if any] of Social Security income deducted first).

Given all that, Medicare Prices for 2019 range as follows:

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So Is Medicare Free?

When you consider a program that on average costs over $1,000 per beneficiary per month …

… Then knowing that a substantial part of the needed price is covered by the tax on virtually all workers and other income earners …

… and since many beneficiaries may not rationalize the substantial dollars being stripped away from the (unrelated) Social Security payments to help pay their share of the price…

… and considering that a material number of beneficiaries have incomes over $85,000 per year (many still work) …

… and finally, comparing all the components of coverage Americans have received when younger and working (Hospital, Physician and Prescriptions) …

… These numbers, taken together, for many people are certainly not free.

 

 

 

Truth #2: Medicare Coverage May Not Be As “Good”​ As You Expected

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Denny Weinberg

Background

In the mid 1960’s, Medicare was first created as a “Social Insurance Program”, designed to be consistently applied to all older Americans. Comprehensive, inexpensive, and relevant to the standards-of-care at the time, this was considered “Good” Coverage.

But the passing of years unveiled a multitude of unanticipated dynamics.

  • For example, the very definition of “health care” has both broadened and deepened materially since 1965. The first MRI or the first Angioplasty would not occur until a decade later.
  • Meanwhile, the age-65 life expectancy has expanded by nearly 50% since then, exposing the medical system to care demands and opportunities never contemplated, late in life.
  • While care technology, science and processes have responded to this expanding demand, they brought with them dramatically accelerating costs, year after year.
  • Finally, political pressures to respond to special populations, including dialysis patients, or emerging care settings like home health or hospice, or even outpatient prescription drugs… all resulted in substantial Medicare Program scope creep.

So it should not be surprising that since inception, Medicare COVERAGE itself has required regular, often dramatic modifications to keep its “social insurance purpose” in balance with these and other continually changing demands. Some of that pressure has even challenged the highly protected “social Insurance” model itself:

  • By the early 2000’s, these pressures yielded to means-based-pricing for seniors of varying income levels
  • A 2013 survey of Americans over age 65 revealed “raising the age of eligibility to 67” as the second most popular to reduce costs and improve long term viability.

Americans Are Not Very Informed About Medicare

Most Americans (even beneficiaries) are not really aware of the full effect of these sequential program changes, because they have been spread out over many years. After all, the Medicare program has been around for 50 years, but most beneficiaries participate for less than a dozen years. So, many assume this program has been stable and managable year after year, with surprising simplicity and effectiveness. But Medicare Coverage is not at all what it was 50 years ago.

Consider a small number of coverage dynamics between the late 1960’s and today:

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Other coverage details and provisions have had to change along the way too, few offsetting the additional copayments, co-insurance, annual and lifetime limits or out-of-pocket cost exposure for beneficiaries.

Could Today’s Medicare Even Work Without The Private Market?

These exposures explain why most Medicare beneficiaries are compelled to purchase a supplemental private insurance plan to cover those costs not covered by today’s Medicare. Such private plans are called Medicare Supplement Plans, and they have been increasingly necessary as the exposures under the Traditional Medicare program have grown over the years. But they too have become expensive due to the the increasing uncovered portions of Medicare. Over the years, the average Medicare Supplement has increased in price from less than $20 per month in the 1980’s to a few Hundred dollars per month today.

Alternatively, Medicare beneficiaries today can choose to leave Traditional Medicare altogether, and apply their “benefit equivalent eligibility” to the purchase of an alternative from a private Insurance company. These programs, called Medicare Advantage Plans, attract nearly 1/3 of all Medicare Beneficiaries who simply can’t make Traditional Medicare pencil out.

So What Does This Mean?

Most of the Medicare-For-All proposals don’t advertise the high coverage gaps in the current model, and the dependency on either a private market supplement (Medicare Supplement Plans), or private market alternative (Medicare Advantage Plans). Without these, Medicare-For-All will be woefully inadequate to meet the coverage expectations of Americans. Alternatively, Medicare-For-All proposals could completely re-invent what Medicare is , increasing its coverage and raising its price substantially.

Either way, it is going to cost a lot of money.

 

 

Truth #1: Many Opt-Out of Medicare?

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https://www.linkedin.com/pulse/medicare-all-opt-outs-denny-weinberg/

For All?

… like liberty and justice, Medicare is imagined by some to be All-American. But is it? Can it be? Should it be?

A Historical Perspective:

In 1965, the first year of Medicare, nearly 19 Million Americans enrolled, 56% of whom were previously uninsured according to a Kennedy-era study. It was a simple program back then, providing only acute hospital and physician coverage for Americans over age 65. It was the only real health insurance option for people over age 65, virtually all of whom retired by that age back then.

Today, an estimated 63 Mil or 18% of the US population are eligible for Medicare. And after decades of major program changes, the 2018 program covers more than just older Americans, and Medicare coverage is more complex and broader than the original program. Like the original program (Traditional Medicare), the coverage still has substantial patient exposures for deductibles, co-payments and lifetime / per-incident limits. And, despite popular folklore, it is far more expensive due to the same pressures that impact coverages for the rest of us.

Along the way, other alternative or complementary coverages have emerged. No surprise, this dynamic reflects in part, the vastly different nature and demands of American consumers including older American consumers. These newer coverage sources include private insurers, employers, unions, states, municipalities and school districts as well as expanded coverages for the poor (including the older poor).

Does Medicare ALONE Work For Those That Have Access Today?

Consider this:

  • 38 Mil, or only 60% of those eligible are enrolled in Traditional Medicare. But because of indexing coverage limitations, only 19% of these Traditional Program participants do not have some form of supplemental or alternative coverage.
  • Another 9 Mil are over 65 but still working, and only because of their employer wrap-around coverage, Medicare is workable.
  • Another 21 Mil are enrolled in Private Alternatives to Medicare called Advantage Plans after opting out of Traditional Medicare. In 2018 there were 2,317 such Medicare Advantage plans available nationwide allowing the average beneficiary to choose among 21, an increase from 19 in 2017. This is anything but single-payer and becoming less single-payer-like each year due to natural market dynamics.
  • Finally, 12 Mil of all of these are also enrolled in Medicaid (dually eligible), due to low income, disability, etc. Most are part of the 38 Mil people with Traditional Medicare, but only because of the Medicaid program, their Medicare is coverage and price affordable and/or relevant.

What Does This Say About Medicare For All?

Nearly 1/2 of all who are offered Medicare today choose a private market alternative, or can only make it work due to other private market wraparound safety nets. So why do we think Medicare will be attractive to the rest of the population without similar private market protections?

 

More good news for Medicare Advantage plans

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https://mailchi.mp/5a57c9e710d7/the-weekly-gist-april-5-2019?e=d1e747d2d8

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Medicare Advantage (MA) plans got a better-than-anticipated pay hike this week, as the Centers for Medicare & Medicaid Services (CMS) released its final 2020 policy and payment updates for the private coverage program for seniors. MA payments will increase by an average of 2.53 percent in 2020, higher than the 1.59 percent initially proposed by CMS earlier this year, reflecting CMS’s expectation that MA services will grow faster than it initially thought.

With the announcement, CMS is also finalizing plans to allow reimbursement for supplemental, non-clinical services covered by MA plans, such as transportation, nutrition support, and housing improvements, as long as those services are intended to improve health status. The final update also confirms CMS’s intent to continue updating its risk-adjustment methodology to more accurately reflect the intensity of services delivered to beneficiaries, a change that has been controversial among insurers, who fear the new methodology will result in lower payments from the government.

Despite these concerns, shares of MA insurers traded higher after the CMS announcement, and health plans will no doubt be pleased with yet another year of good news from CMS on MA rates. Given continued strong enrollment growth, robust rate increases, and a pipeline of millions of aging Baby Boomers poised to become eligible for Medicare, large insurers (and increasingly, providers) will view MA as their primary source of growth for the next decade or more.

 

 

 

 

How Medicare Advantage steers the Silver Tsunami into coordinated, value-based care

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https://www.healthcarefinancenews.com/news/how-medicareadvantage-steers-silver-tsunami-coordinated-value-based-care

CMS and other health insurers are using the program to deliver innovative and unique value to customers, both in terms of cost and quality.

Today’s Medicare Advantage plans are flourishing and the Silver Tsunami is among the reasons.

“Over the last four years, Medicare Advantage enrollment increased by more than 30 percent, while the number of people eligible for Medicare grew by about 18 percent,” said Steve Warner, vice president of Medicare Advantage Product for UnitedHealthcare Medicare and Retirement.

Other reasons for the growth: Innovative models from big insurers and upstarts alike that improve care for health plan members and drive revenue for payers as they look beyond fee-for-service.

IT STARTS WITH THE CONSUMER

Consumers are finding unique value in MA, both in terms of the quality of care and in the financial value.

Medicare Advantage, in fact, makes it easier for consumers to navigate the healthcare system and choose providers, in a way that traditional Medicare does not, said those interviewed.

“Actually it’s pretty hard to navigate the healthcare system on your own,” said Tip Kim, chief market development officer at Stanford Health Care. “Most Medicare Advantage plans have some sort of care navigation.”

Warner of UnitedHealth’s Warner added that Medicare Advantage also offers value and simplicity.

“It provides the convenience of combining all your coverage into one plan so you have just one card to carry in your wallet and one company to work with,” Warner said. “Most plans also offer prescription drug coverage and additional benefits and services not available through original Medicare, including dental, vision and fitness.”

REBRANDING FOR THE NEW ERA

MA plans did not emerge out of thin air. By another name, Medicare Advantage is managed care, a term that was the bane of healthcare during the height of HMOs in the 1980s.

“Medicare Advantage has rebranded ‘managed care’ to ‘care coordination,'” said consultant Paul Keckley of The Keckley Report. “Humana and a lot of these folks have done a pretty good job. Coordinating care is a core competence. Managed care seems to be working in this population.”

MA came along at the right time for CMS’s push to value-based care.

“I would suggest on the providers’ side, embracing Medicare Advantage is an opportunity to get off the fee-for-service mill,” said Jeff Carroll, senior vice president of Health Plans for Lumeris, which recently paired with Stanford Health Care on the Medicare Advantage plan, Stanford Health Care Advantage.

“Provider-sponsored Medicare Advantage plans are a way to put teeth into an accountable care organization,” Keckley added. “Medicare Advantage success is a silver tsunami among major tsunamis. Obviously it’s a profitable plan for seniors and profitable for underwriters. The winners in the process will get this to scale.”

MA is an innovative model that is not a government-run system, but a privately-run system essentially funded by the government.

PAYERS IN THE MA GAME

UnitedHealthcare has the largest MA market share of any one insurer.  Twenty-five percent of Medicare Advantage enrollees are in a UnitedHealthcare MA plan, followed by 17 percent in Humana, 13 percent in a Blue Cross Blue Shield and 8 percent in Aetna, according to the Kaiser Family Foundation.

Numerous insurers, in fact, have gotten into the MA market, including Clover Health in San Francisco, a five-year-old startup which has Medicare Advantage as its only business.

Clover is a tech-oriented company that boasts machine learning models that can accurately predict and identify members at risk of hospitalization.

Because Clover focuses only on MA, it can do a better job at problem solving the needs of an older population, said Andrew Toy, president and CTO of Clover Health.

“The problems we face in Medicare Advantage are very different from a younger generation,” Toy said.

Forty percent of the older population is diabetic. Most seniors will be dealing with a chronic disease as they get older.

In other insurance, whether its individual or commercial, the lower cost of the healthier population offsets the cost of the sicker population. MA has no way to offset these costs. Plans can’t cherry-pick consumers or raise premiums for a percentage of the population.

What MA plans can do is design plans that fit the varying needs of the population. A plan can be designed for diabetics. For younger seniors or those not dealing with a chronic disease, a plan can be designed that includes a gym membership.

“All these plans are regulated,” Toy said. “We have the flexibility to move dollars around. We can offer a higher deductible plan, or a nutrition plan. The incentives for us in Medicare Advantage are different than the incentives in Medicare. CMS has explored giving us more leeway for benefits. Consumers have a choice while still having the guarantees of Medicare.”

Toy believes regular Medicare is more expensive because MA offers a more affordable plan based on what an individual needs.

“When you need it, we get more involved in that care,” Toy said, such as “weight control issues for diabetics.”

The drawbacks are narrower networks, though Toy said Clover offers an out-of-network cost sharing that is pretty much in line with being in-network.

UnitedHealthcare’s Medicare Advantage LPPO plans offer out-of-network access to any provider who accepts Medicare, Warner said.

UnitedHealthcare also offers a wide variety of low and even zero-dollar premium Medicare Advantage plans and annual out-of-pocket maximums, Warner said. By contrast, original Medicare generally covers about 80 percent of beneficiaries’ healthcare costs, leaving them to cover the remaining 20 percent out-of-pocket with no annual limit.

“From a consumer value proposition, it makes Medicare Advantage a better deal,” Kim said. “One is Part B, 20 percent of an unknown number. Knowing what the cost will be in a predictable manner is a preferable manner.”

Stanford Health Care launched a Medicare Advantage plan in 2013. Lumeris owned and operated its own plan, Essence Healthcare, for more than eight years. Stanford and Lumeris partnered on Stanford Health Care Advantage in northern California, using Lumeris technology to help manage value-based reimbursementand new approaches to care delivery through artificial intelligence-enabled diagnostic tools and other methods.

“We are not a traditional insurance company,” Kim said. “We’re thinking about benefits from a provider perspective. It’s a different outlook than an insurance company. By definition we’re local.”

MA MARKET STILL HAS ROOM TO GROW

While the Medicare Advantage market is competitive, it is also under-penetrated, Brian Thompson, CEO for UnitedHealthcare Medicare & Retirement, said during a 2018 earnings report.

Currently, about 33 percent of all Medicare beneficiaries are in an MA plan, he added, but UnitedHealth sees a path to over 50 percent market concentration in the next 5-10 years.

It’s a path not so subtly promoted by the Centers for Medicare and Medicaid Services.

As a way to encourage insurers to take risk and get in the market, around 2009, CMS gave MA insurers 114 percent of what it paid for fee-for-service Medicare. The agency began decreasing those payments so that by 2017, traditional Medicare and MA became about even.

MA insurers instead thrive on their ability to tailor benefits toward wellness, coordinate care and contain costs within the confines of capitated payments, the essence of value-based care.

They have received CMS support in recent rate notices that gives them the ability to offer supplemental benefits, such as being able to target care that addresses the social determinants of health. Starting in 2020, telehealth is being added to new flexibility for these plans.

WHAT THE FUTURE MAY HOLD FOR MA

Medicare Advantage plans have expanded and, in so doing, opened innovative new options for plans and their customers alike at the same time that the ranks of people eligible for Medicare continues to swell.

So where is it all going?

Medicare Advantage is changing the way healthcare is paid and delivered to the point that Keckley and Toy agreed the future may not lie in Medicare for All, but in Medicare Advantage for all.

“I think a reasonable place to end, is in some combination where the government is involved in price control, combined with the flexibility of Medicare Advantage,” Toy said. “That’s really powerful.”