Medicare Advantage is on the hot seat.
High-profile critics like Don Berwick and Richard Gilfillan have called it the “Money Machine” in the pages of Health Affairs because of profit it has delivered to health system stakeholders.
Congressional inquiries have been launched into questionable Medicare Advantage marketing and clinical practices.
And some, like California Congressman Ro Khanna, have gone so far as to opine that Medicare Advantage plans should not be able to use the term “Medicare” to describe themselves, even introducing legislation to this effect.
And, yet, Medicare Advantage continues to grow apace with more than 30 million Americans—more than 50% of all people eligible for Medicare—choosing Medicare Advantage over traditional Medicare.
Why?
The answer is simple. The traditional Medicare program—which well-served generations of American—has failed to provide (in an environment of medical innovation and rising costs) the kind of income protection that was originally intended when Medicare was signed into law by President Lyndon Johnson.
Individuals who want full coverage from Medicare—after a lifetime of paying Medicare taxes—have to pay Medicare Part B premiums ($174.70 per month in 2024) along with Medicare Part D premiums for prescription drug coverage (averaging $48 per month in 2024) along with the additional cost of a Medicare supplemental policy ($64-409 per month policy).
Land in the hospital without a supplemental policy? The 2024 inpatient deductible is $1632.
Need glasses or dental work or hearing aids? Traditional Medicare provides no coverage whatsoever.
Imagine yourself the average older adult with a fixed pretax income of $49,000 spending hundreds upon hundreds of dollars a month on medical insurance (when you expected Medicare would cover all of your medical expenses when you needed it) and you can see why Medicare Advantage plans—which provide many of these benefits with a part B premium alone—are particularly popular with low-moderate income seniors.
That said, there are problems with the program that are well documented.
The industry has run amuck with marketing and benefits that are from from the program’s original intent.
A fraction of bad actor brokers work to confuse older adults more than they serve them.
STAR ratings are often disconnected from true plan quality.
Payments to plans are sometimes out of line with the true cost of care.
And prior authorization and utilization practices (that are particularly aggressive from some for-profit plans) can create massive unnecessary friction between patients and their doctors.
Rather than throw the baby out with the bathwater as critics suggest—I offer five ways the Congress and CMS can work to improve Medicare advantage plans today:
I. Mandate Standardized Benefit Designs
People compare MA plans based on benefits. But not all benefits are the same. Low co-pays, zero-cost medications, dental and vision coverage are worthy. Plans offering unsustainable cash equivalent benefits attract people’s attention, but may do little for them when they need care. As I’ve argued before, plans should be forced to compete based on excellence, not edge benefits and give-always. By adopting standardized plan benefits rooted in the provision of healthcare treatments, the federal government could ensure that consumers are able to choose plans on the basis of health outcomes, which should be the most important metric in their decision-making process.
There is important precedent for this type of standardization. Senator Ron Wyden led the effort to standardize Medicare supplemental policies. He and his colleagues on the Senate Finance committee can do the same for Medicare Advantage. In their wisdom, the Commissioners of MedPac, the federal advisory commission that advises Congress on issues of Medicare policy, recently endorsed this idea as well.
II. Reform the Broker Industry to Focus More on Clinical Support
About a third of MA beneficiaries rely on brokers to help them choose a plan. At their best, brokers are knowledgeable about trends in the industry and can help match a beneficiary to a plan that meets their specific needs. But they could do so much more. As the leader of healthcare organizations, I’ve met hundreds of brokers who are not just random salespeople; they are trusted members of their communities and a regular fixture in the lives of the people they serve. As such, they could augment the healthcare workforce (in a time of growing workforce shortages) by performing many of the functions that community health workers typically perform—such as helping with care navigation, counseling people on health behaviors, ensuring medication adherence, and even providing direct care services such as blood pressure screenings. Brokers—who earn lifetime commissions for enrolling someone in a Medicare advantage plans—can be rewarded for the work they do to keep seniors healthy and independent as they age.
III. Re-orient STAR Ratings Around Measures That Actually Matter
Many seniors use CMS’s system of star ratings to choose a MA plan. These ratings can be a valuable indicator of a plan’s worthiness. Nonetheless, the ratings often fall short. For example, researchers who looked at medication adherence measures found that “because the measures reward the purchasing of medication rather than medication use itself, health plan behavior may be increasingly de-linked to actual beneficiary behavior.” This has been an open secret in the Medicare Advantage industry. It’s time to move star ratings away from process measures, and instead to measure outcomes. Put another way, the star-rating system should more heavily index on measures that matter to patients and their families.
IV. Continue To Fix Risk Adjustment
Last year, the federal government made changes to the Medicare Advantage risk adjustment model, updating codes and removing those that CMS said were most likely to be abused by plans. Notwithstanding legitimate concern that these changes could shift resources away from lower-income, high needs patients, such as dual eligible Medicare-Medicaid beneficiaries, the government should go further by focusing its efforts on fixing codes that don’t align with cost in real time. It makes no sense for CMS to reimburse plans when diagnosis codes don’t align with the true cost of caring for members.
It also makes no sense for CMS to try to eliminate these occurrences through small-sample retrospective audits. In an era of computerized data transmission and algorithmic data analysis, much of the data CMS needs is available immediately and in great quantity. And yet, the agency still performs retrospective audits that look at unrepresentative data. At the plan I lead, we have been asked by auditors to locate data that is nearly a decade old. As a result, we expend resources tracking down old paper charts. What’s more, the government’s correction when anomalies are detected is to demand repayment and fine health plans. But what about all the anomalies that occurred after the audit year? A better way forward would be to conduct more immediate audits, so that if problems are flagged, health plans can make rapid corrections. It’s high time that CMS used technology to adjudicate risk coding in real time
V. Incentivize Integration Between Health Plans and Provider Organizations
Even the most unstudied observer of American healthcare knows that there is often friction between health plans and provider organizations. Plans say providers drive up costs with unnecessary procedures, tests and prescription medications; providers say plans are inflexible and stand in the way of appropriate patient care. It’s beyond time to change the dynamic between the two groups.
The solution lies is global capitation, the payment model by which providers receive a fee to manage all of a plan member’s healthcare expenses. CMS should steer more health payers and providers toward capitation so that provider organizations and health systems are managing utilization themselves rather than health plan doctors not involved in the care of patients. Many physicians and hospital systems are uneasy about capitation as they don’t want the pressure of assuming financial risk for patient care. But as my mentor Medicare Advantage pioneer Leeba Lessin used to say, “Capitation is freedom, not risk.” Capitation enables clinicians to make necessary investments in order to manage costs and, as Leeba put it, “to do what’s right for patients.”
Medicare Advantage is not a perfect program—far from it. But, executed properly, can be far better than the alternative for many older adults and much closer to the program that President Johnson imagined when he first signed it into law in 1965.
