Complex Medicare advantage choices may overwhelm seniors--especially those with impaired decision making

The proliferation of Medicare Advantage plans has given Medicare enrollees more choices, but these could be overwhelming for some, especially for those with impaired decision-making capabilities. We analyzed national survey data and linked Medicare enrollment data for the period 2004-07 to examine the effects on enrollment of expanded choices and benefits in the Medicare Advantage program. The availability of more plan options was associated with increased enrollment in Medicare Advantage when elderly Medicare beneficiaries chose from a limited number of plans-for example, fewer than fifteen plans. Enrollment was unchanged or decreased in Medicare Advantage when beneficiaries chose from larger numbers of plans-for example, fifteen to thirty, or more than thirty. Elderly adults with low cognitive function were less responsive to the generosity of available benefits than those with high cognitive function when choosing between traditional Medicare and Medicare Advantage. Simplifying choices in Medicare Advantage could improve beneficiaries' enrollment decisions, strengthen value-based competition among plans, and extend the benefits of choice to seniors with impaired cognition. It could also lower their out-of-pocket costs.     

An economic history of Medicare part C

Context: Twenty‐five years ago, private insurance plans were introduced into the Medicare program with the stated dual aims of (1) giving beneficiaries a choice of health insurance plans beyond the fee‐for‐service Medicare program and (2) transferring to the Medicare program the efficiencies and cost savings achieved by managed care in the private sector. Methods: In this article we review the economic history of Medicare Part C, known today as Medicare Advantage, focusing on the impact of major changes in the program's structure and of plan payment methods on trends in the availability of private plans, plan enrollment, and Medicare spending. Additionally, we compare the experience of Medicare Advantage and of employer‐sponsored health insurance with managed care over the same time period. Findings: Beneficiaries’ access to private plans has been inconsistent over the program's history, with higher plan payments resulting in greater choice and enrollment and vice versa. But Medicare Advantage generally has cost more than the traditional Medicare program, an overpayment that has increased in recent years. Conclusions: Major changes in Medicare Advantage's payment rules are needed in order to simultaneously encourage the participation of private plans, the provision of high‐quality care, and to save Medicare money.     

Competitive bidding in Medicare Advantage: Effect of benchmark changes on plan bids

Bidding has been proposed to replace or complement the administered prices that Medicare pays to hospitals and health plans. In 2006, the Medicare Advantage program implemented a competitive bidding system to determine plan payments. In perfectly competitive models, plans bid their costs and thus bids are insensitive to the benchmark. Under many other models of competition, bids respond to changes in the benchmark. We conceptualize the bidding system and use an instrumental variable approach to study the effect of benchmark changes on bids. We use 2006–2010 plan payment data from the Centers for Medicare and Medicaid Services, published county benchmarks, actual realized fee-for-service costs, and Medicare Advantage enrollment. We find that a $1 increase in the benchmark leads to about a $0.53 increase in bids, suggesting that plans in the Medicare Advantage market have meaningful market power.     

Pharmacy utilization and the Medicare Modernization Act

To control expenditures and use medications appropriately, the Medicare drug coverage program has established pharmacy utilization management (PUM) measures. This article assesses the effects of these strategies on the care of seniors. The literature suggests that although caps on drug benefits lower pharmaceutical costs, they may also increase the use of other health care services and hurt health outcomes. Our review raises concerns regarding the potential unintended effects of the Medicare drug program's PUM policies for beneficiaries. Therefore, the economic and clinical impact of PUM measures on seniors should be studied further to help policymakers design better drug benefit plans.     

Medicare Managed Care Spillovers and Treatment Intensity

Evidence suggests that the share of Medicare managed care enrollees in a region affects the costs of treating traditional fee‐for‐service (FFS) Medicare beneficiaries; however, little is known about the mechanisms through which these ‘spillover effects’ operate. This paper examines the relationship between Medicare managed care penetration and treatment intensity for FFS enrollees hospitalized with a primary diagnosis of AMI. I find that increased Medicare managed care penetration is associated with a reduction in both the costs and the treatment intensity of FFS AMI patients. Specifically, as Medicare managed care penetration increases, FFS AMI patients are less likely to receive surgical reperfusion and mechanical ventilation and to experience an overall reduction in the number of inpatient procedures. Copyright © 2015 John Wiley & Sons, Ltd.     

Impact of managed care on the treatment, costs, and outcomes of fee-for-service Medicare patients with acute myocardial infarction

OBJECTIVE: To examine the effects of market-level managed care activity on the treatment, cost, and outcomes of care for Medicare fee-for-service acute myocardial infarction (AMI) patients. DATA SOURCES/STUDY SETTING: Patients from the Cooperative Cardiovascular Project (CCP), a sample of Medicare beneficiaries discharged from nonfederal acute-care hospitals with a primary discharge diagnosis of AMI from January 1994 to February 1996. STUDY DESIGN: We estimated models of patient treatment, costs, and outcomes using ordinary least squares and logistic regression. The independent variables of primary interest were market-area managed care penetration and competition. The models included controls for patient, hospital, and other market area characteristics. DATA COLLECTION/EXTRACTION METHODS: We merged the CCP data with Medicare claims and other data sources. The study sample included CCP patients aged 65 and older who were admitted during 1994 and 1995 with a confirmed AMI to a nonrural hospital. PRINCIPAL FINDINGS: Rates of revascularization and cardiac catheterization for Medicare fee-for-service patients with AMI are lower in high-HMO penetration markets than in low-penetration ones. Patients admitted in high-HMO-competition markets, in contrast, are more likely to receive cardiac catheterization for treatment of their AMI and had higher treatment costs than those admitted in low-competition markets. CONCLUSIONS: The level of managed care activity in the health care market affects the process of care for Medicare fee-for-service AMI patients. Spillovers from managed care activity to patients with other types of insurance are more likely when managed care organizations have greater market power.     

The costs of decedents in the Medicare program: implications for payments to Medicare + Choice plans

OBJECTIVE: To discuss and quantify the incentives that Medicare managed care plans have to avoid (through selective enrollment or disenrollment) people who are at risk for very high costs, focusing on Medicare beneficiaries in the last year of life-a group that accounts for more than one-quarter of Medicare's annual expenditures. DATA SOURCE: Medicare administrative claims for 1994 and 1995. STUDY DESIGN: We calculated the payment a plan would have received under three risk-adjustment systems for each beneficiary in our 1995 sample based on his or her age, gender, county of residence, original reason for Medicare entitlement, and principal inpatient diagnoses received during any hospital stays in 1994. We compared these amounts to the actual costs incurred by those beneficiaries. We then looked for clinical categories that were predictive of costs, including costs in a beneficiary's last year of life, not accounted for by the risk adjusters. DATA EXTRACTION METHODS: The analyses were conducted using claims for a 5 percent random sample of Medicare beneficiaries who died in 1995 and a matched group of survivors. PRINCIPAL FINDINGS: Medicare is currently implementing the Principal Inpatient Diagnostic Cost Groups (PIP-DCG) risk adjustment payment system to address the problem of risk selection in the Medicare+Choice program. We quantify the strong financial disincentives to enroll terminally ill beneficiaries that plans still have under this risk adjustment system. We also show that up to one-third of the selection observed between Medicare HMOs and the traditional fee-for-service system could be due to differential enrollment of decedents. A risk adjustment system that incorporated more of the available diagnostic information would attenuate this disincentive; however, plans could still use clinical information (not included in the risk adjustment scheme) to identify beneficiaries whose expected costs exceed expected payments. CONCLUSIONS: More disaggregated prospective risk adjustment methods and alternative payment systems that compensate plans for delivering care to certain classes of patients should be considered to ensure access to high-quality managed care for all beneficiaries.     

Identifying, assessing and managing high-risk patients under Medicare risk contracts

Physicians participating in Medicare managed care plans are increasingly sharing in the financial risks of providing care to enrollees. Although capitation payments are calculated to reflect the average costs for an entire patient panel, there is typically great variation among patients, from healthy individuals to patients requiring high volume and high-cost care. To be successful, physicians must identify high-risk seniors, develop care plans to maintain health and functioning, and monitor health status and ongoing care and treatment. Techniques for performing a comprehensive geriatric assessment include written questionnaires and interviews during office appointments. The goal is to evaluate each patient's health status, medical risk factors, psychosocial profile, cognitive capacities, and functional capabilities and limitations. After frail and at-risk seniors are identified, the physician must collaborate with the case manager, geriatric nurse practitioner, other caregivers, and the patient and family members to initiate and maintain effective care management.     

Health outcomes. New quality measure for Medicare.

OBJECTIVE: A new measurement of health care quality for Medicare beneficiaries has been implemented by the Health Care Financing Administration (HCFA). This paper describes the program, presents baseline data and highlights associated issues. DESIGN: The Health Outcomes Survey (HOS) is a longitudinal cohort mail survey. Changes in population health status after 2 years will be evaluated on an individual plan level. SETTING: Two-hundred and eighty-seven US Medicare managed care plans. MAIN OUTCOMES MEASURES: Physical component and mental component summary scales derived from the SF-36. FINDINGS: Baseline data documented lower health status in older populations, while functional limitations and disease prevalence were higher. Among different plans, mean functional levels were found to be similar, although a few plans contained populations with exceptionally low levels. These data do not support the assertion that enrolees in for-profit plans are healthier than non-profit plans. CONCLUSIONS/IMPLICATIONS: The HOS is the first large-scale program to evaluate health outcomes among older Americans. HCFA recognizes several technical and policy issues. Technical issues include possible biased reporting for subpopulations, the validity of proxy responses and respondent burden. Policy issues concern the appropriateness of using a generic measure such as the SF-36 and how much change in health status can be attributed to quality of health care. HCFA plans to extend the HOS to beneficiaries in traditional Medicare. The HOS project is expected to encourage more efforts to maintain or improve the health status of the Medicare managed care population.     

Risk-adjustment system for the Medicare capitated ESRD program

Medicare is the principal payer for medical services for those in the U.S. population suffering from end-stage renal disease (ESRD). By law, beneficiaries diagnosed with ESRD may not subsequently enroll in Medicare Advantage (MA) plans, however, the potential benefits of managed care for this population have stimulated interest in changing the law and developing demonstration plans. We describe a new risk-adjustment system developed for Medicare to pay for ESRD beneficiaries in managed care plans. The model improves on current payment methodology by adjusting payments for treatment status and comorbidities.     

Everybody into the pool! Medicare in the twenty-first century

Both the President and now Republicans have proposed to slow the growth of Medicare costs by allowing seniors to join private managed care health insurance plans. In this article, the author demonstrates that a private market in health insurance will not function like a "normal" commercial insurance market, will constantly be undermined by adverse selection, and therefore is unlikely to achieve the objectives for which it is being created. This result follows from established principles of commercial insurance and our modern understanding of the pathophysiology of disease.     

Gender Differences in Patient Experience Across Medicare Advantage Plans

BackgroundMedicare beneficiaries annually select fee-for-service Medicare or a private Medicare insurance (managed care) plan; information about plan performance on quality measures can inform their decisions. Although there is drill-down information available regarding quality variation by race and ethnicity, there remains a dearth of evidence regarding the extent to which care varies by other key beneficiary characteristics, such as gender. We measured gender differences for six patient experience measures and how gender gaps differ across Medicare plans.MethodsWe used data from 300,979 respondents to the 2015–2016 Medicare Advantage Consumer Assessment of Healthcare Providers and Systems surveys. We fit case mix–adjusted linear mixed-effects models to estimate gender differences and evaluate heterogeneity in differences across health plans.ResultsNationally, women's experiences were better than men's (p < .05) by 1 percentage point on measures involving interactions with administrative staff (+1.6 percentage point for customer service) and timely access to care (+1.1 percentage point for getting care quickly), but worse on a measure that may involve negotiation with physicians (getting needed care). Gender gaps varied across plans, particularly for getting care quickly and getting needed care, where plan-level differences of up to 5 to 6 percentage points were observed.ConclusionsAlthough the average national differences in patient experience by gender were generally small, gender gaps were larger in some health plans and for specific measures. This finding indicates opportunities for health plans with larger gender gaps to implement quality improvement efforts.     

Estimating Medicare advantage lock-in provisions impact on vulnerable Medicare beneficiaries

Beginning January 2006, Medicare beneficiaries will have limited ability to change health plans. We examine the Medicare managed care enrollment and disenrollment behavior of traditionally vulnerable beneficiaries from 1999-2001 to estimate the potential impact of the new enrollment restrictions. Findings that several such groups were more likely to make multiple health plan elections, leave their managed care plan midyear, and/or have higher voluntary disenrollment rates and transfers to original fee-for-service (FFS) Medicare suggest that the lock-in provisions may have greater negative impacts on vulnerable beneficiaries. This article identifies several recommendations that CMS might consider to lessen the detrimental effects on at-risk groups.     

Socioeconomic status and medical care expenditures in Medicare managed care

This study examined the effects of education, income, and wealth on medical care expenditures in two Medicare managed care plans. The study also sought to elucidate the pathways through which socioeconomic status (SES) affects expenditures, including preferences for health and medical care and ability to navigate the managed care system. We found that education, income, and wealth all affected medical care expenditures, although the effects of these variables differed across expenditure categories. Moreover, the effects of these SES variables were much smaller than the effects found in earlier studies of fee-for-service Medicare. The pathway variables also were associated with expenditures. Accounting for the pathways through which SES affects expenditures narrowed the effect of SES on expenditures; however, the change in the estimates was very small.     

Payer-provider collaboration in accountable care reduced use and improved quality in maine medicare advantage plan

Patient-centered, accountable care has garnered increased attention with the passage of the Affordable Care Act and new Medicare regulations. This case study examines a care model jointly developed by a provider and a payer that approximates an accountable care organization for a Medicare Advantage population. The collaboration between Aetna and NovaHealth, an independent physician association based in Portland, Maine, focused on shared data, financial incentives, and care management to improve health outcomes for approximately 750 Medicare Advantage members. The patient population in the pilot program had 50?percent fewer hospital days per 1,000 patients, 45?percent fewer admissions, and 56?percent fewer readmissions than statewide unmanaged Medicare populations. NovaHealth's total per member per month costs across all cost categories for its Aetna Medicare Advantage members were 16.5?percent to 33?percent lower than costs for members not in this provider organization. Clinical quality metrics for diabetes, ischemic vascular disease, annual office visits, and postdischarge follow-up for patients in the program were consistently high. The experience of developing and implementing this collaborative care model suggests that several components are key, including robust data sharing and information systems that support it, analytical support, care management and coordination, and joint strategic planning with close provider-payer collaboration.     

Disability and Medicare Costs of Elderly Persons

Widely studied as a predictor of long-term care use, functional disability is also an important explanatory variable for acute care costs spent for the elderly. As policy makers contemplate ways to control rapidly growing Medicare expenditures, such as increasing the enrollment of beneficiaries into managed care programs, knowledge about the relation between functional disability and Medicare costs is likely to become more important for the design of program features. The research described here uses data from the new Medicare Current Beneficiary Survey to estimate the relation between functional disability and Medicare costs, the effects on costs of interactions between disability and other personal characteristics of beneficiaries, and changes in the level of disability and Medicare costs.     

Paying Medicare Advantage plans: To level or tilt the playing field

Medicare beneficiaries are eligible for health insurance through the public option of traditional Medicare (TM) or may join a private Medicare Advantage (MA) plan. Both are highly subsidized but in different ways. Medicare pays for most of costs directly in TM, and subsidizes MA plans based on a “benchmark” for each beneficiary choosing a private plan. The level of this benchmark is arguably the most important policy decision Medicare makes about the MA program. Many analysts recommend equalizing Medicare’s subsidy across the options – referred to in policy circles as a “level playing field.” This paper studies the normative question of how to set the level of the benchmark, applying the versatile model developed by Einav and Finkelstein (EF) to Medicare. The EF framework implies unequal subsidies to counteract risk selection across plan types. We also study other reasons to tilt the field: the relative efficiency of MA vs. TM, market power of MA plans, and institutional features of the way Medicare determines subsidies and premiums. After review of the empirical and policy literature, we conclude that in areas where the MA market is competitive, the benchmark should be set below average costs in TM, but in areas characterized by imperfect competition in MA, it should be raised in order to offset output (enrollment) restrictions by plans with market power. We also recommend specific modifications of Medicare rules to make demand for MA more price elastic.     

Medicare beneficiaries less likely to experience cost- and access-related problems than adults with private coverage

The experiences of people covered by Medicare and those with private employer insurance can help inform policy debates over the federal budget deficit, Medicare's affordability, and the expansion of private health insurance under the Affordable Care Act. This article provides evidence that people with employer-sponsored coverage were more likely than Medicare beneficiaries to forgo needed care, experience access problems due to cost, encounter medical bill problems, and be less satisfied with their coverage. Within the subset of beneficiaries who are age sixty-five or older, those enrolled in the private Medicare Advantage program were less likely than those in traditional Medicare to have premiums and out-of-pocket costs exceed 10?percent of their income. But they were also more likely than those in traditional Medicare to rate their insurance poorly and to report cost-related access problems. These results suggest that policy options to shift Medicare beneficiaries into private insurance would need to be attentive to potentially negative insurance experiences, problems obtaining needed care, and difficulties paying medical bills.