Rates of Switching Between Medicare Options

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.