The insurance industry’s counter to Medicare for All is Medicare Advantage, the privately run plans that already serve 22 million seniors or more than a third of beneficiaries.
That number will only grow in the years ahead as the next generation of seniors, already comfortable with managed care through their workplace plans, age into the program. The Congressional Budget Office projects MA plan enrollment will grow to 42% of beneficiaries by 2028.
Why are seniors flocking to these insurer-run alternatives, which would be eliminated under M4A bills? That’s easy: more benefits, no added premiums for supplemental and drug coverage, and lower out-of-pocket expenses. MA plans’ limited networks and prior authorization requirements seem an acceptable tradeoff, especially for healthier seniors.
But what if seniors opting into MA are not only healthier, but also less prone to visiting the doctor or hospital? What if MA plans’ claims that they are succeeding in delivering higher quality care at lower cost is based on nothing more than self-selection or, more darkly, plan cherry-picking?
There’s mounting evidence this may be the case. A report by the Kaiser Family Foundation revealed that beneficiaries who enrolled in MA plans in 2016 had $1,253 less in Medicare spending in the year before joining an MA plan compared with seniors with similar medical profiles who stayed in traditional Medicare.
Insurers say they’ve earned their soaring enrollments and rising profitability by focusing on care coordination, offering incentives for healthy behavior, and providing targeted interventions for high-cost patients with multiple chronic conditions. The Kaiser study suggested it may actually be due to “pre-existing differences in care seeking behavior.”
Who’s right? One way to tell would be by analyzing whether high utilizers who joined MA saw their claims go down once they were in a private plan. Alas, as the Medicare Payment Advisory Commission discussed in depth at its spring meeting, the data flowing from MA plans to the CMS is completely inadequate for evaluating spending patterns.
Unlike traditional fee-for-service Medicare, MA plans receive a capitated payment for every enrollee. While the agency has a detailed record for every service its providers delivered under fee-for-service, it only began collecting “encounter” data from MA plans in 2012 and it is low quality.
When MedPAC analysts compared MA reports to hospital records for the same patients, 10% of the beneficiaries didn’t line up and 22% of claims had different service dates. Physician data was even worse with less than half the MA encounter reports lining up with data provided by doctors.
In theory, MA plans have an incentive to accurately report claims since they affect risk-adjustment payments. But only 25% of those adjustments are based on encounter data. Most is based on diagnoses, not actual treatments delivered.
To get better data, MedPAC recommended the CMS withhold payments to MA plans until they provide complete and accurate encounter data. It also called for using Medicare administrative contractors, which process fee-for-service claims, to collect the MA data if that didn’t work.
It’s time for full transparency on MA service payments to providers, with the data including both the quantity of services delivered and their prices. If, as some providers allege, MA plans are using their market power to pay less than Medicare rates, the CMS will eventually want to use that information to calculate the annual updates for Medicare Advantage plans.
Robert Pear (1949-2019)
I note with great sadness the passing of Robert Pear, the New York Times healthcare reporter whom colleagues often called the hardest-working journalist in Washington. His frequent scoops often began with a close reading of the Federal Register, poring over obscure government reports, or seeing the significance in a fleeting comment at a congressional hearing. He will be missed.
