In a healthcare policy landscape in which virtually every policy position has advocates and detractors, it’s easy to get lost in all the claims and counterclaims. And nowhere is the swirl of pro and con opinions more complex than in the discussion around Medicare Advantage, the capitated-payment program under Part C of the Medicare program, which pays private health plans to provide population health management, care management, and wellness services to Medicare beneficiaries.
As of last year, 2023, Medicare Advantage reached an inflection point, with a majority of Medicare beneficiaries nationwide now enrolled in MA plans. In an Aug. 9 article published by the Kaiser Family Foundation, “Medicare Advantage in 2023: Enrollment Update and Key Trends,” reporter Tricia Neuman noted that “Medicare Advantage enrollment has been on a steady climb for the past two decades following changes in policy designed to encourage a robust role for private plan options in Medicare. After a period of some instability in terms of plan participation and enrollment, The Medicare Modernization Act of 2003 created stronger financial incentives for plans to participate in the program throughout the country and renamed private Medicare plans Medicare Advantage. In 2023, 30.8 million people are enrolled in a Medicare Advantage plan, accounting for more than half, or 51 percent, of the eligible Medicare population, and $454 billion (or 54%) of total federal Medicare spending (net of premiums). The average Medicare beneficiary in 2023 has access to 43 Medicare Advantage plans, the largest number of options ever,” she wrote.
Further, Neuman noted, “More than half (51 percent) of eligible Medicare beneficiaries are enrolled in Medicare Advantage in 2023. The share of Medicare beneficiaries enrolled in Medicare Advantage varies widely across counties. In 2023, nearly one third (31 percent) of Medicare beneficiaries live in a county where at least 60 percent of all Medicare beneficiaries are enrolled in Medicare Advantage plans, while 10 percent live in a county where less than one third of all Medicare beneficiaries are enrolled in Medicare Advantage plans. The wide variation in county enrollment rates could reflect several factors, such as differences in firm strategy, urbanicity of the county, Medicare payment rates, number of Medicare beneficiaries, health care use patterns, and historical Medicare Advantage market penetration.” And, she wrote, “Medicare Advantage enrollment is highly concentrated among a small number of firms. UnitedHealthcare and Humana account for nearly half (47 percent) of all Medicare Advantage enrollees nationwide, and in nearly a third of counties (32 percent; or 1,013 counties), these two firms account for at least 75% of Medicare Advantage enrollment.”
And the debate over the value of Medicare Advantage continues. On the one hand, there are the boosters, including, unsurprisingly, AHIP, America’s Health Insurance Plans, which represents the vast majority of private health plans in the United States. Last November, the Washington, D.C.-based association published a report entitled “Medicare HI Trust Fund Solvency Assuming MA Utilization.” AHIP sponsored the report, while the research used in the report was conducted by the Washington, D.C.-based consulting firm Avalere. That report found that the utilization of inpatient, skilled nursing, and home health services utilization could be better controlled with more Medicare recipients being enrolled in Medicare Advantage (MA) plans, versus being enrolled in the original Medicare program.
The report noted that “The 2023 Medicare Board of Trustees report projected that the Hospital Insurance (HI) Trust Fun will be insolvent by 2031, heightening stakeholder and policymaker interest in promoting efficiency and preserving quality in Medicare. To investigate how utilization could affect solvency, Avalere estimated HI Trust Fund balances under an alternative scenario that assumes that utilization in fee-for-service (FFS) Medicare, as measured by patient days per user, was at the same level as MA. The services assessed in the analysis included inpatient, skilled nursing facility (SNF), and home health (HH) services (covered by Part A). This analysis included the change in total Part A spending, the change in the balance of the HI Trust Fund, and the change in the year in which the HI Trust Fund would become insolvent. Avalere developed a model to adjust the actual FFS utilization based on the disease and demographic characteristics of the MA enrollees using these services to account for any discernible differences between MA and FFS beneficiaries.”
In order to conduct the analysis, the report noted that “Avalere leveraged the 100-percent Medicare FFS claims and Medicare Advantage (MA) claims from Inovalon’s MORE2 registry® for 2018 and 2019. Avalere identified beneficiaries using inpatient, SNF, and HH services from FFS and MA claims data where the beneficiaries had both Part A and Part B enrollment.” And the Avalere researchers found that, “For all Part A services analyzed, MA utilization, as measured by patient days, was lower than FFS. Between 2018 and 2019, the differences between MA and the alternative, utilization-based scenario were 36 percent for inpatient, 14 percent for SNF, and 28 percent for HH.” As a result, the Avalere researchers concluded, “The HI Trust Fund would remain solvent for an additional 17 years—until 2048—if FFS utilization levels were similar to MA utilization levels.”
Yet complaints over claims denials and other issues are emerging. An NBC News report published online on Oct. 31, 2023, found multiple providers willing to criticize Medicare Advantage plans for denials and other issues. As NBC News’s Gretchen Morgenson noted in the report, entitled “’Deny, deny, deny’: By rejecting claims, Medicare Advantage plans threaten rural hospitals and patients, say CEOs,” “Last year [in 2022], a federal audit from 2013 was released showing that 8 of the 10 largest plans had submitted inflated bills to Medicare. As for the quality of care, the Medicare Payment Advisory Commission, a non-partisan agency of Congress, said in a March report that it could not conclude Medicare Advantage plans “systematically provide better quality” over regular Medicare.
Even worse,” Morgenson wrote, “because the plans routinely deny coverage for necessary care, they are threatening the existence of struggling rural hospitals nationwide, CEOs of facilities in six states told NBC News. While the number of older Americans who rely on Medicare Advantage in rural areas continues to rise, these denials force the hospitals to eat the increasing costs of care, causing some to close operations and leave residents without access to treatment.” And it quoted Kenneth Williams, M.D., CEO of Alliance HealthCare in Holly Springs, Mississippi, as saying about Medicare Advantage plans, that “They don’t want to reimburse for anything — deny, deny, deny. They are taking over Medicare and they are taking advantage of elderly patients.” And she noted that “Williams is something of a local hero in Holly Springs. When the area hospital was in danger of closing in 1999, he marshaled resources and bought it to keep it open. Alliance serves a county with 38,000 people. Still, this spring he had to shut down a long-time geriatric psychiatry program that had served the community for over eight years. Coverage denials from Medicare Advantage plans killed the program, Williams said.”
And, Morgenson wrote, “If the government hoped Medicare Advantage plans would reduce the costs of care, that has not been the outcome. Medicare pays the plans 6 percent more than it would spend if plan enrollees were covered under regular, fee-for-service Medicare,” according to the Medicare Payment Advisory Commission, or MedPAC. Instead, “Medicare payments to the plans will total $27 billion more in 2023 than if patients were enrolled in traditional Medicare, the report projected,” she wrote, referring to the commission’s June 2023 report.
And, she wrote, “State insurance commissioners told NBC News they, too, receive many complaints from customers saying they were sold Medicare Advantage plans without understanding their limitations. A major complaint, said Mike Chaney, the Mississippi Insurance Commissioner: ‘Consumers are not aware their doctors are likely to change under the Medicare Advantage plans.’”
Meanwhile, in between the boisterously “pro” and “con” pillars of Medicare Advantage promotion and denunciation, lies a vast sphere of complexity and detail. Senior Contributing Editor David Raths examined some of the issues, when he covered a panel discussion that took place in Philadelphia last November. As Raths wrote in a report published on Nov. 9, “Medicare Advantage plans now insure more than half of eligible Medicare beneficiaries. A panel of experts recently convened by the Leonard Davis Institute of Health Economics at the University of Pennsylvania addressed some questions about the costs of the program, the value it brings to consumers and payers, and how well it serves the increasingly diverse group of enrollees who receive their Medicare coverage from MA plans. The talk was moderated by David Grande, M.D., M.P.A., director of policy at Penn LDI and associate professor of medicine at the Perelman School of Medicine, who set up the discussion.”
Raths went on to write that “Grande said that although Medicare Advantage (MA) now serves more than half of all Medicare beneficiaries, we see wide variation of Medicare Advantage enrollment across states, with some states in the single digits and some as high as 60 percent. Looking across U.S. counties, there are very high Medicare Advantage penetration rates mostly in large urban areas. Enrollment in the program is also highly concentrated among a relatively small number of managed care companies.”
Among the challenges, Grande noted, was, “[A]s the program takes on this very large role in the delivery of healthcare to millions of Americans, there are a lot of questions about whether it’s fulfilling its original goal of delivering quality care at lower costs compared to traditional fee for service Medicare.”
And he quoted Tricia Neuman, Sc.D., senior vice president and executive director of the Program on Medicare Policy, and senior advisor to the president at the Kaiser Family Foundation, as noting that individuals of color are enrolling in Medicare Advantage in rapid numbers, in part because they feel a financial imperative to do so, because Medicare Advantage plans don’t have a supplemental premium, and offer these extra benefits, or they may be passively enrolled because they’re also on Medicaid. “But it would be great to know more about their experiences in Medicare Advantage plans,” Neuman said on the panel. “For example, we don’t know who’s using these extra benefits and whether they get value. We don’t know very much about outcomes and how that varies by race and ethnicity. We don’t know about prior authorization and denials and whether that differs among people based on race and ethnicity. So as more and more people of color are moving into Medicare Advantage plans, I think it’s really important to collect better information so we understand how well these programs are really working for people, including those with the lowest incomes and the greatest needs.”
In that same discussion, Zirui Song, M.D., Ph.D., an associate professor of health care policy and medicine in the Department of Health Care Policy at Harvard Medical School, added to the complexity of the landscape by responding to a question about the impact of vertical integration in the Medicare Advantage space. Dr. Song noted that on the one hand, some health systems are establishing
MA plans of their own. There are also primary care physician groups that have become MA plans or purchased the risk from the plans to manage the care of that population of patients, where the plan gets a cut off the top and the provider group keeps the remainder under the capitation, he explained. At the same time, insurers that have large books of business in MA have increasingly acquired providers directly. Examples include the United Healthcare ownership of 70,000 doctors in America, as they report, or the CVS Aetna acquisition of Oak Street and Signify Health, which is a home health company, or the Amazon acquisition of One Medical recently, which is another primary care practice that previously acquired Iora.
All of this adds up to one gigantic puzzle of a policy landscape. And the claims and counterclaims will only accelerate and intensify, as Medicare Advantage continues to grow market share. And yes, it will always be a “messy” discussion, with no easy answers, and manifold questions. But it is a space that everyone should be watching, as the twists and turns in the program’s evolution will impact patient care organizations and clinicians healthcare system-wide. In other words, stay tuned.