Comparative Health of Medicare Advantage Enrollees

By April 10, 2019 Commentary

For as long as their have been Medicare risk contracts, there have been concerns that the participating plans would cherrypick, that is, go after the healthier beneficiaries on the theory that they would make more money.  With risk-adjusted premiums now the norm for Medicare Advantage plans, I know from personal experience that this is not generally the case, in fact most plans and their at-risk providers would rather have sicker beneficiaries because they believe there is more opportunity to improve care and lower utilization, thereby earning more money.  (And let’s be honest, more than anything the plans want to make money.)  Nonetheless, from a plan reimbursement perspective it is still important to understand the comparative health and health needs of enrollees in each branch of Medicare.  A study in Health Affairs takes a little different approach in looking at the question.   (HA Article)   It should first be noted that “healthier” and “lower cost” are not the same thing.  A healthier beneficiary is likely to use fewer services, but a low-cost one could be someone who actually is avoiding needed services and doesn’t really have better health status.  To my point above, I don’t think most MA plans today seek to enroll low-cost beneficiaries; they simply don’t get paid as much for them and can’t find ways to reduce costs further.  With diagnostic information now used for payment purposes, we have a pretty good idea of the comparative health of beneficiaries, although plans tend to have more intensive coding (which also doesn’t mean that a patient isn’t really in worse health status, it is also likely the case that providers in the FFS side “undercode” and also may undertreat some conditions).

One way of identifying, somewhat crudely, the relative health of Medicare Advantage and FFS beneficiaries is their expected and actual mortality.  Sicker people are presumably more likely to die.  So that is what these researchers did, only instead of looking at it from a static perspective at the time of enrollment, they looked at mortality rates over a long period of time, which likely tells you more about the true health status of the enrollee.  (And honestly, the plans don’t want beneficiaries to die, they don’t get any more premiums at that point.  So they want lower mortality.)  This allows for the possibility, which seems realistic, that people’s health status and odds of dying can change over time.  The authors created cohorts for each year from 2008 to 2012 and followed them for five years.  The cohorts were those who were newly enrolled in Medicare, with subgroups for MA and FFS, and those who were in FFS but switched to MA compared to those who stayed in FFS.  So four groups in all.  Mortality hazard ratios were computed at the end of each year, as well as actual mortality during the year.  Overall adjusted mortality rates in MA were 9-15% lower than in traditional Medicare.  For new Medicare beneficiaries who went into an MA plan, in that first year, their adjusted mortality risk was 30% lower than those going into FFS Medicare.  Existing FFS beneficiaries who switched to MA had about 20% lower risk.  But both of these MA groups’ mortality risk regressed back to the FFS level over the five-year study period.  For the new beneficiaries it was reduced to being 13% less and for the switchers to being 7% less.  It is unknown whether further regression would be observed if the study-period were lengthened.

It is unlikely that the regression is caused by worse care in the MA plans; in fact on just about every measure MA quality is superior to FFS.  And plans are very incented to engage in wellness and care coordination activities that improve health status and lower utilization.  So what was observed in the study is more likely inherent health risks that emerge over time, creating more similar populations.  Healthier people may initially be attracted to MA, but they too eventually  have more health issues.

Kevin Roche

Author Kevin Roche

The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry through Roche Consulting, LLC. Mr. Roche is available to assist health care companies through consulting arrangements and may be reached at khroche@healthy-skeptic.com.

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