Over 30% of Medicare beneficiaries are now enrolled in Medicare Advantage plans. Since the start of Medicare risk-contracting it has been alleged that plans sought and enrolled healthier beneficiaries than the Medicare population at large; allegations which have been addressed by marketing regulations and adjustments to the payment mechanisms to minimize incentives for this supposed behavior. A related issue is whether beneficiaries who are or who become high-cost will stay in MA plans or whether the restrictions inherent in such plans, and perhaps subtle tactics by the plans, will encourage them to leave. Research carried by Health Affairs explores this question. (HA Article) The researchers looked at switching between Medicare Advantage and traditional Medicare during 2010 and studied the characteristics of the switchers. In general, MA members were somewhat younger and more likely to be members of racial minorities, has slightly lower use of acute hospital care and short-stay nursing home care, but much lower use of home health care and long-stay nursing home services. Across the entire study group, 4% of fee-for-service Medicare beneficiaries switched during the year and 5% of Medicare Advantage ones did so. People who had at least one hospitalization and were in an MA plan were more likely to switch that those with a hospitalization in the fee-for-service option. Similarly MA users of home health care were about twice as likely to change options as were such users in the traditional program. Similarly, individuals in a Medicare Advantage plan who had long-term nursing home use were about 6 times more likely to switch than beneficiaries receiving such care in the fee-for-service program. Dual eligibles tended to show an even greater difference. While the authors refer to this as a case of high-cost patients switching options, they did not do a cost analysis or even quantify utilization, they merely made broad categorizations. The only logical conclusion is that people with certain kinds of care use, especially long-term nursing home care, were more likely to switch out of MA plans, suggesting that it is something about restrictions on available providers or length of benefits or other factors that led to the switch.
Today most plans will actually actively seek high-cost beneficiaries, as they get paid more for these patients and can make more money when they control their care and costs effectively, so it seems unlikely plans are trying to get this subset of members to leave. The analysis therefore raises a number of interesting questions. One is why these beneficiaries chose Medicare Advantage in the first place–did they fail to fully understand how a Medicare Advantage plan works? A second is whether they are leaving to avoid reasonable and appropriate controls on excessive care-seeking, which clearly would not be good for the fee-for-service program, as it would drive up overall Medicare spending. A third is whether the providers themselves are encouraging the change because it may result in higher payments to the providers. This particular study did not address these questions, and also relied on data five years old, which can be significant in health care research. Since Medicare Advantage plans have been shown to deliver care that is at least as good, and probably better, than that received by beneficiaries in the fee-for-service program, it seems important to understand why people are switching out.
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It seems to surprise the people who read this apparently flawed Brown University research in Health Affairs that seniors on Medicare tend to make supplemental insurance decisions that are best for them financially. If they do not need a lot of medical care, they choose insurance with low premiums and high co-pays. If they need a lot of medical care, they choose insurance with high premiums and low co-pays. How can this be the academics and the left wingers ask? After all, it is academic-elite/Democratic-Party dogma that seniors are stupid.
(As an aside, I say the Brown University research is apparently flawed because as just one of the taxpayers than funded it, I can’t read it on Health Affairs. It’s behind a paywall. But based on the press release that Brown put out it appears to be based on real lack of understanding of how Medicare works. For example:
— People on Medicare who are placed on Medicaid leave public Part C health plans because Medicaid duplicates the secondary-to-Medicare supplemental coverage that are key public Part C plans’ benefits. It would make no sense to be on both plans
— People in custodial care in long term nursing facilities leave public Part C health plans disproportionately because about 50% of them are on Medicaid (see first bullet)
— People who are homebound leave public Part C health plans because penny-wise, pound-foolish bureaucratic government rules make it very hard for Part C health plans to provide home visits for medical services. In fact the current position of most left-wing academics is that Part C home health care is fraudulent
— Of course, public Part C health plans “may… offer access to different sets of providers.” They are different plans
— Of course “people should carefully consider all the benefits, payments and quality measures before enrolling in Medicare Advantage plans,” Mr. or Ms. Rahman (one of the authors quoted in the press release). That’s both common sense and the only thing that your research apparently proved.
The Brown University research seems to leave out the most important information: what do the 50% of people in nursing homes for custodial care who are not on Medicaid do? Most likely they move to private Medigap insurance that runs on average twice as expensive as public Part C health plans.
As I said above, perhaps the Brown University research factors in these issues. But we will never know because we are just the suckers that paid for the research but we can’t read it.