Separating Fact from Fiction on Medicare Advantage EGWPs

by Mary Beth Donahue and Andrew MacPherson

A few months ago, you would be forgiven for thinking that an EGWP (pronounced “egg whip”) is a breakfast dish, rather than a valued health coverage option.

But, as more workplaces and even the nation’s largest city increasingly move to adopt these Medicare Advantage health plans – formally known as Employer Group Waiver Plans – for their retirees, coverage of this health insurance option is now front and center, from the New York Daily News to California Healthline, and states in between.

The heightened attention paid to EGWPs, and some of the misleading arguments that have come along with it, merit closer review. In this blog post, we discuss the role of EGWPs today and examine recent media claims.

The Value of Medicare Advantage EGWPs

EGWPs are health plans that employers or unions provide to their retirees through Medicare Advantage. Today, roughly five million Medicare Advantage enrollees are covered by an EGWP product, more than doubling since 2010 and comprising about 19% of total Medicare Advantage enrollment in 2021.

With so many Medicare Advantage beneficiaries receiving their coverage through an EGWP, the role of these products cannot be discounted when surveying broader Medicare Advantage trends, whether that is Medicare Advantage’s 94% satisfaction rate, its lower rate of avoidable hospitalizations, or even its lower COVID-19 mortality rate.

EGWPs provide Medicare Part A (hospital) and B (physician) benefits, as well as supplemental benefits. Employers may include Part D (drug) benefits and typically pay Part B premiums and co-pays to reduce cost-sharing for retirees.

EGWPs are also distinguished for their high quality ratings for patient satisfaction and health outcomes. Research from Kaiser Family Foundation finds that “among enrollees in employer-sponsored group plans, 98% are in plans with at least 4 or more stars” on the Centers for Medicare & Medicaid Services’ (CMS) 5-star scale, adding that “employer plans have consistently had higher quality ratings than plans generally available to Medicare beneficiaries.”

EGWPs Across the Country

Teachers’ Retirement System of Kentucky offers health coverage to about 37,000 Medicare-eligible teacher retirees through an EGWP. Premiums are lower today than they were 20 years ago, and beneficiaries enjoy supplemental benefits that include a SilverSneakers membership, meal delivery after surgery for qualifying beneficiaries through Mom’s Meals, and telehealth visits through providers like Doctor on Demand, just to name a few.

Likewise, in North Carolina, retired state employees can choose an EGWP with drug coverage, $0 co-pays for preventive services, and a $0 annual deductible.

And, for all the conjecture about New York City’s decision to provide high-quality coverage to retired city workers through an EGWP – a decision brokered by union leaders and supported by bother former Mayor Bill de Blasio (D) and current Mayor Eric Adams (D) – the end result is a coverage option with $0 premiums, enhanced supplemental benefits, and an expected $600 million in annual savings for taxpayers.

Those figures aren’t just anecdotal: research from Avalere Health found that beneficiaries in EGWPs see 26.7% lower out-of-pocket costs than those who are not. The same research found that beneficiaries enrolled in an EGWP pay an average of $7 less out-of-pocket per prescription.

Misleading Coverage and Claims

Along with the newfound attention paid to EGWPs have come some misleading claims. For example, a news outlet in New York reported on retirees worrying that the city’s Medicare Advantage EGWP could be an “unbearable financial burden” without noting that this particular plan has $0 monthly premiums, the same low annual deductible as the city’s previous retiree coverage, and lower co-pays for primary care visits. Indeed, Medicare Advantage beneficiaries save, on average, $1,640 a year in total health expenditures compared to fee-for-service Medicare. The same article included statements from concerned retirees that the city “shouldn’t eliminate health care for anybody” – without clarification that, in fact, it is not.

More recently, Kaiser Health News wrote about the rise in EGWPs and interviewed various stakeholders, some of whom offered arguments that deserve further examination. For example, one stakeholder suggested a lack of guardrails in EGWPs’ benefit design, saying “employers and insurers can design their health benefits any way they want to.”

In truth, CMS explains, “EGWPs are expected to follow all [Medicare] Parts C and D requirements except those that are explicitly waived.” The agency’s Medicare Managed Care Manual outlines 36 pages of rules that EGWPs must follow.

While CMS does permit certain flexibilities to EGWPs, this allows health plans to better tailor their offerings to meet an employer’s needs and ensure workers get the best deal. As an analysis from Milliman explains, “Employers, especially public ones, typically issue requests for proposals (RFPs) for EGWPs. The RFP outlines the employer’s current situation, challenges, and goals, and then gives health plans an opportunity to ‘put their best foot forward’ and showcase their abilities to serve the group.”

For its reporting, Kaiser Health News also spoke to a leader of an anti-Medicare Advantage organization who claimed that, with EGWPs, “finding a doctor who participates in the plan may be more difficult.”

This fails to acknowledge the fact that many EGWPs, such as those adopted by New York City and North Carolina, provide a customized preferred provider organization (PPO) network where beneficiaries can see any doctor who accepts Medicare for the same cost to them.

For beneficiaries in more traditional provider networks, they can draw security from the fact that, overall, Medicare Advantage beneficiaries give their networks of doctors, hospitals, and specialists a 95% satisfaction rate, while 88% agree that Medicare Advantage lets them see the doctors they want on their terms.

Conclusion

When it comes to something as deeply affecting as health care, seniors deserve straight talk – not sensationalism and scare tactics. Medicare Advantage EGWPs provide a coverage tool that is delivering lower costs and better benefits while protecting retirees, employers, and taxpayers alike.

In the case of New York City, for example, this $0 premium, low-deductible, union-negotiated plan provides transportation, meal, and wellness benefits unavailable under the previous plan, all while maintaining lower co-pays for primary care and allowing retirees to see any doctor that accepts Medicare – though you would not know this from recent media coverage.

Heightened focus on EGWPs calls upon all of us to look beyond the headlines and dig deeper to unearth the truth of EGWPs’ valuable role in fulfilling the promise of Medicare and protecting seniors’ health and financial security.

Mary Beth Donahue is the President and CEO of the Better Medicare Alliance.

Andrew MacPherson is Senior Policy Advisor to the Public Sector HealthCare Roundtable.