Our research team breaks down this week’s top healthcare news.
In an age of unprecedented change, staying current has never been more important. Our team at Chartis is curating news most relevant to the healthcare industry and tracking the topics that are trending on seven key issues: high reliability care, digital and advanced technology, financial sustainability, health disparities, the health ecosystem of the future, partnerships, and the provider enterprise. Each week, we break down what’s happening and why it matters.
A new report was published in the June issue of Health Affairs — a systematic review of 48 studies that compared Medicare and Medicare Advantage (MA) plans across a variety of utilization, cost, outcomes, and patient experience metrics. Overall, the studies included in the review suggest that Medicare Advantage has outperformed traditional Medicare across several utilization metrics — fewer hospital admissions (but not readmissions), fewer emergency department visits, fewer home health visits, shorter hospital and skilled nursing facility (SNF) stays — as well as lower overall healthcare spending and some higher quality indicators. However, the study also reports that there was inconsistent, limited, or no evidence that Medicare Advantage outperformed Medicare in terms of mortality rates, hospital readmissions, racial/ethnic disparities, or patient experience. The authors underscore that several of the studies examined “might not fully account for selection bias, unobserved differences in social determinants of health, or risk adjustment challenges,” and that some did not test for statistical significance in the data differences observed. Still, it is the first comprehensive look at comparison studies between Medicare and Medicare Advantage in decades and sheds some light on the different Medicare options.
The Medicare insurance program, administered through the Centers for Medicare & Medicaid Services (CMS) for those age 65 or older or who have end-stage renal disease (ESRD), continues to garner attention in large part because its financing sustainability is at risk. MedPAC, the Medicare Payment Advisory Committee, consisting of 17 Medicare trustees, produces two reports each year, in March and June. In the March 2020 report, the trustees estimated that the program’s Hospital Insurance Trust Fund, which funds Medicare Part A and is primarily funded through a payroll tax, will be depleted by 2026. This is in large part because the aging of the population is reducing the number of workers per Medicare beneficiary, estimated to be 4.6 workers at the program’s inception, 3.0 in 2019, and projected to drop to 2.5 within the next 10 years. The negative impact of COVID-19 has furthered the dire financial predicament — MedPAC’s March 2021 report forecasts that the fund will become insolvent in 2024.
Some have looked to Medicare Advantage (MA), also known as Medicare Part C, as a potential way to salvage or extend the Medicare program. Medicare Advantage is a “privatized” option, allowing enrollees to receive all Medicare benefits via a private insurance company like UnitedHealthcare, Humana, a Blue Cross Blue Shield plan, or a provider-owned or venture-backed plan. CMS pays private insurance companies a capitated payment per enrollee, and Medicare Advantage insurers must manage the care and claims for their enrollees through an HMO or PPO structure. These companies must cover all Part A and Part B services in their MA plans, and most include Part D drug coverage. To manage costs and make a profit, they have more restrictions on which providers are “in network” compared to traditional Medicare, and they implement other health and healthcare management strategies.
Proponents of MA suggest that because private insurance companies take on more risk for their patients through the capitated model, they are incentivized to help patients better manage their health, optimize healthcare utilization, and minimize cost of care while maintaining quality and patient experience standards. They also point to legislation in recent years that has favored MA plans by allowing supplemental benefits and favorable enrollment rules benefitting seniors and other Medicare-eligible people (though “many experts say [the bonus payments use] flawed methods,” as reported in a recent New York Times piece). Furthermore, MA plans have a cap for out-of-pocket expenses, whereas traditional Medicare has no cap unless supplemental coverage (often known as Medigap) is obtained for additional premiums.
Critics of MA highlight higher levels of denials of care — as the New York Times reported, a report in 2018 by federal investigators found that MA plans had a pattern of inappropriately denying patient claims, and that there were “widespread and persistent problems related to denials of care and payment in Medicare Advantage plans.” Others have criticized a perceived bias in educational materials for seniors about the various Medicare plan options, citing an early version of a 2019 “Medicare & You” handbook to be mailed to all eligible enrollees, which described MA plans as a “less expensive alternative” despite data that showed very little difference in patients’ average spending. A recent email from CMS urged enrollees to investigate MA plans to better understand the covered benefits but did not encourage any additional educational activities for traditional Medicare. A recent video from CMS promoted MA’s nonmedical supplemental benefits, such as transportation, meal support, and fitness memberships, some of which are not yet widely available in MA plans. As a federal agency, CMS is required to promote “informed” and unbiased plan selection and is not supposed to be pushing enrollees toward MA plans more than other Medicare options, alarming critics.
Aside from the Medicare vs. MA performance debate and the strength of the arguments for and against MA plans, enrollment trends cannot be ignored. Enrollment in MA plans nearly doubled from just over 11 million beneficiaries in 2010 to 22 million in 2019, representing 34 percent of all beneficiaries. According to an analysis by The Chartis Group, enrollment is projected to grow to 50 percent of all Medicare enrollees as early as 2025. Additional observations from The Chartis Group’s recent analysis include:
Several implications should be noted:
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