It’s Time To Focus on the Value of Medicare Advantage

Krista Drobac, Former Interim Executive Director

Name is Krista

As a Democratic staffer in the Senate during the debate and passage of the Medicare Modernization Act in 2003, I was concerned about private plans getting more involved in Medicare. Why were we going to pay commercial plans to do what Medicare does? Would favorable risk be taken out of the Medicare risk pool? Would seniors really receive additional benefits?

What I have come to realize is that Medicare Advantage does not do what traditional fee for service does, it does more and it does it better. And, Medicare Advantage plans are serving a very diverse group of beneficiaries, many of whom suffer from chronic disease. With 16 million seniors and people with disabilities in Medicare Advantage plans today it is time that we focus on what the program is doing for people and how it is contributing to our collective desire to achieve higher quality and greater efficiency.

I have seen firsthand the positive impact of Medicare Advantage with my 71 year-old mother. She has chronic conditions, so coordinating care across providers and settings is somewhat complex and especially important. Her Medicare Advantage plan coordinates her care while containing out-of-pocket costs to her. She receives additional benefits as well. In fact, when she had knee replacement recently, she came home with a remote monitor that allowed her doctors to monitor her progress from home. Remote patient monitoring is supplemental benefit in Medicare Advantage.

We can answer the questions that gave me pause back in 2003 by looking at the value proposition of Medicare Advantage today.

Quality is Better

Medicare Advantage plans have huge incentives to provide high quality care not only because they want to keep their customers, but because their payments are tied to quality. Many of the studies looking at quality in Medicare Advantage used data that pre-dated the new quality incentives put in place by the Affordable Care Act. Even so, the data shows higher quality in Medicare Advantage plans. One study compared the quality of ambulatory care from 2003 through 2009 between beneficiaries enrolled in Medicare Advantage HMOs and those enrolled in traditional Medicare. The authors looked at how the performance of various types of Medicare HMOs differed from that of traditional Medicare for these same measures. They found that beneficiaries in Medicare HMOs were consistently more likely than those in traditional Medicare to receive appropriate breast cancer screening, diabetes care, and cholesterol testing for cardiovascular disease.[1] In the first review of literature on Medicare Advantage in 10 years, the Kaiser Family Foundation looked at 45 studies that focus on Medicare. They found that Medicare Advantage, on average, scores more highly than traditional Medicare on subsets of Medicare HEDIS indicators – primarily those pertaining to use of preventive care services. Medicare beneficiaries in HMOs were less likely to be hospitalized for potentially avoidable hospitalizations than beneficiaries in traditional Medicare.

The Better Medicare Alliance will be investing in new research that uses more recent data so we can better understand the impact of the inclusion of new quality initiatives in the Affordable Care Act.

Services & Affordability

On the questions of services and affordability, the answers are definitively yes, seniors are seeing additional benefits and feeling the impact of lower and more predictable cost sharing. Medicare Advantage plans are not just offering supplemental benefits such as vision, hearing, dental, enhanced coverage of home infusion and personal care. Plans are also offering care management and population health management (PHM). In addition to promoting wellness, PHM requires monitoring of population risk and designing and implementing programs that manage sub-populations based on their risk….For patients identified as being at risk for chronic conditions, common interventions include targeted health education or outreach to engage members in activities intended to reduce risk factors, enrollment in care management programs, and working with nurses in health education.” A recent study of 72 health plans with more than 100,000 enrollees found “the MA experience reveals that population health management involves design and implementation of both extensive and intensive services to manage the needs of a complex population….Plans reported extensive activities directly for members, including smoking cessation, wellness discounts, and the promotion of healthy lifestyles (exercise and nutrition). [2] This kind of benefit design cannot be done in a fee for service environment.

Program Structure Incentivizes Value over Volume

Medicare Advantage contributes to the goals health policy experts have been advising for decades: better care coordination, more opportunities for population health management, more meaningful interventions for people with chronic disease, and lower cost sharing for beneficiaries. Fee for service will always create incentives for overuse of services that don’t necessarily improve quality. The current structure of the Medicare Advantage program with capitation and quality metrics at its core, creates the exact incentives we need to manage care better. In one of the large Medicare Advantage plans, 50 percent of providers are in value-based contracts. A recent study examining Medicare Advantage data from 2003-2009 found that “overall, Medicare Advantage HMO enrollees might use fewer services and be experiencing more appropriate use of services than enrollees in traditional Medicare.” [3] Another study found, “the available measures, while limited, suggest that, on average, MA plans offer care of equal or higher quality and for less cost than [traditional] Medicare. [4]

Plan Payment

There has been much made of plan payment, but a closer look at the data demonstrates the relative efficiency of Medicare Advantage compared to fee for service. According to MedPAC, in 2014, plans of all types submitted premium bids that came in at 98 percent of fee for service. When you look at HMOs specifically, the percentage goes down to 95. [5] Medicare also adjusts plan payments based on quality performance. That is a clear check on payments. The benchmarks are also designed to ensure access for beneficiaries in all geographic areas.

As the Better Medicare Alliance moves forward, we will be further examining the impact of Medicare Advantage on the quality of care received by seniors. We must build on the evidence base that is forming and fill the gaps in research. I believe that research will demonstrate the value of this program to seniors, providers, taxpayers and the health care system as a whole.

  1. Ayani, Langdon, Zaslavsky et al, “Medicare Beneficiaries More Likely To Receive Appropriate Ambulatory Services In HMOs Than In Traditional Medicare,” Health Aff (Millwood) July 2013 32:71228-1235
  2. Tompkins, Higgins, Perloff, Veselovskiy, “Population Health in Medicare Advantage, Health Affairs Blog, April 2, 2013
  3. Bruce E. Landon, Alan M. Zaslavsky, Robert C. Saunders, L. Gregory Pawlson, Joseph P. Newhouse and John Z. Ayanian, “Analysis Of Medicare Advantage HMOs Compared With Traditional Medicare Shows Lower Use Of Many Services During 2003–09,” Health Aff December 2012 vol. 31 no. 12 2609-2617
  4. Newhouse, Joseph, McGuire, Thomas, “How Successful is Medicare Advantage?” Milbank Quarterly, Vol. 92, No.2, 2014(pp.351-394)
  5. Miller, Capretta, “An Emerging Consensus: Medicare Advantage is Working and Can Deliver Meaningful Reform, November 2, 2014, Health Affairs Blog