Medicare Spillover Effects

By December 3, 2019 Commentary

Medicare Advantage has grown rapidly and early indications are that open enrollment 2019 will result in another large membership gain for MA plans.  As Medicare Advantage grows, do the more intensive care management techniques used by the MA plans have a spillover effect on the care of fee-for-service beneficiaries?  That question was explored in a presentation at a recent Medicare Policy Advisory Commission meeting.   (MedPAC Presentation)   In addition to effects on care and spending, the presentation looks at whether greater MA penetration is associated with changes in coding of services for FFS beneficiaries.  This could occur because the MA plans have an incentive to engage in more comprehensive coding, as that leads to higher payments.  Understanding true trends in risk-adjusted spending would require untangling coding effects from care pattern changes.  At a high level, MedPAC first noted that the penetration rate for MA in a state appeared to have no correlation with total Medicare spending growth in the state.  There was a slight correlation between increased MA penetration in a state and a reduced level of risk-adjusted spending on FFS beneficiaries.  Spending per fee-for-service beneficiary was 2% lower in the 64 markets with the highest Medicare Advantage penetration compared to the 63 markets with the lowest penetration.  Growth in that spending, however, was basically identical in those high and low penetration MA markets.  There was a slightly higher risk score growth trend from 2013 to 2016 for the FFS population in high-penetration MA markets, but there also was slightly lower per FFS beneficiary spending.  What did appear to be the case was that in markets where FFS spending was relatively high compared to national averages, as you would expect, there was more of an impact of an increase in Medicare Advantage penetration.  So overall, there appears to be a negligible effect of growing Medicare Advantage enrollment on traditional beneficiary care patterns and spending.

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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