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Tuesday, April 4, 2023 | The Latest Research, Commentary, And News From
Health Affairs

Dear John,

Today's newsletter is written by Bruce E. Landon
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from the Department of Health Care Policy, Harvard Medical School and
the Divisions of General Medicine and Primary Care, Beth Israel
Deaconess Medical Center

Medicare Advantage Versus Traditional Medicare

In the latest issue of Health Affairs, my coauthors and I published a
paper where we examined use of services, quality of care, and patient
experiences for Medicare beneficiaries enrolled in private Medicare
Advantage health plans as compared to those in traditional Medicare.

We found that enrollees of MA plans use fewer services, which we found
consistently when examining overall use of services such as the hospital
or the emergency department as well as discretionary services such as
total joint replacement and back surgery.

They did not, however, have fewer outpatient visits or lower use of
nondiscretionary services such as cardiac interventions.

In contrast, measured technical quality using Healthcare Effectiveness
Data and Information Set (HEDIS) measures was consistently better in MA
HMOs (more so than PPOs) and patient experiences actually improved over
the past decade.

This analysis is particularly timely because enrollment in the Medicare
Advantage program has grown dramatically over the past decade; almost
half of eligible beneficiaries are enrolled in MA plans as of 2022.

That enrollment is growing is not a surprise. Beneficiaries are flocking
to MA plans because of better coverage provisions, which are available
at much lower premiums than typical Medigap policies (recently, Michael
Chernew and colleagues estimated that proposed cuts to MA payments
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would only modestly impact such benefits).

Insurers have seen outsized profits in MA by leveraging increased
capitated payments that result from more intensive coding, as well as
generous bonus payments from the star ratings quality program.

Indeed, in its most recent report to Congress
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MedPAC estimates that enrollees in MA plans cost, on average, 6 percent
more than similar enrollees who remain in traditional Medicare.

This results in excess payments to MA plans on the order of hundreds of
billions per year.

Thus, the economics of MA and, as Richard Gilfillan and Donald Berwick
referred to it, the "MA Money Machine
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have been a large focus of attention of policy makers and others trying
to improve the functioning of the Medicare program.

In fact, over the past decade, numerous startups, many in the primary
care space, have emerged, largely to leverage the potential for outsized
profits afforded by learning to play the coding game.

According to the most recent MedPAC estimates (based on 2021 data), MA
risk scores were almost 11 percent higher than scores for similar
traditional Medicare beneficiaries.

This focus on the MA financing system, however, shifts focus away from
what the core potential offered by integrated managed care can achieve.

When first introduced, the allure of managed Medicare was that
participating health plans would provide coordinated and comprehensive
care with a focus on prevention and health maintenance that would
ultimately result in more cost-efficient delivery of care.

The ability of MA plans to improve care while also eliminating some
wasteful care is ultimately what should drive the long-term success or
failure of the MA program, and the impact of MA plans on clinical care
is often ignored in current policy debates.

Research from our team published a decade ago showed that MA HMOs had
lower utilization of services
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also delivering higher quality care
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as measured by HEDIS and Consumer Assessment of Healthcare Providers and
Systems (CAHPS) measures.

However, earlier enrollees in managed care might have been more amenable
to the techniques used by health plans and/or healthier in unmeasured
ways, which suggests that maintaining this performance advantage might
have become more difficult as more and more beneficiaries enrolled in MA
over the past decade.

Unrelated to the current financing scheme, MA plans can employ a variety
of strategies <[link removed]>
to achieve their goals of controlling spending while maintaining or
improving the quality of care delivered to their members.

First, MA plans can employ selective contracting when forming the
networks by including high-performing physicians or hospitals (in fact,
a recent analysis
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shows that MA networks tend to include "average" quality hospitals with
lower use of both higher and lower quality hospitals).

Second, MA plans can use techniques such as prior authorization
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to explicitly limit use of services.

Third, MA plans can employ financial incentives of a variety of other
techniques (for example, measurement and feedback) to directly influence
how physicians manage their MA enrollees. Such incentives can even spill
back over onto the care of traditional Medicare beneficiaries if
physicians adapt their practice style to match their overall incentives.

I think we are just beginning to delve into a greater understanding of
techniques that can be used within the Medicare Advantage program as
well as other contractual environments that put providers and provider
systems at risk for the costs and quality of care (for example, the
Medicare Shared Savings Program) to achieve better performance.

Though such techniques can be context dependent, using rigorous
evaluation to identify the most effective approaches that can then be
disseminated more broadly should be a key focus of researchers and
policy makers in the next decade.

Ultimately, as US spending on health care approaches 20 percent of GDP
with little evidence of slowing down, such techniques will prove of
increasing importance for the future viability of the US health care
system.

Read More
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Elsewhere At Health Affairs

Today in Forefront, Charles Sabatino argues that small, household models
of skilled nursing care
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provide better experiences and outcomes for residents.

Will Robinson and Vaile Wright discuss current challenges in access to
psychological care for Medicare beneficiaries
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and then turn to potential solutions through changes to the clinical
workforce, care delivery, and payment models.

If you're enjoying the free articles published on Forefront, bookmark
the website <[link removed]> to never miss an
update.

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Daily Digest

Differences In Use Of Services And Quality Of Care In Medicare Advantage
And Traditional Medicare, 2010 And 2017
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Bruce E. Landon et al.

Why Nursing Homes Need A Total Redesign
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Charles P. Sabatino

Improving Access To Evidence-Based Psychological Care
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Will Robinson and Vaile Wright

Health Affairs Branded Post:

HHAeXchange's Homecare Predictions for 2022
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Greg Strobel
Sponsored by HHAeXchange <[link removed]>

Advertisement

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Caitlin Carroll On Rural Hospital Survival

Health Affairs' Editor-in-Chief Alan Weil interviews Caitlin Carroll
from the University of Minnesota's School of Public Health on her paper
examining hospital survival in rural markets with a particular focus on
hospitals in financial distress.

Listen Here
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mailto:[email protected]

About Health Affairs

Health Affairs is the leading peer-reviewed journal
<[link removed]> at the intersection of health,
health care, and policy. Published monthly by Project HOPE, the journal
is available in print and online. Late-breaking content is also found
through healthaffairs.org <healthaffairs.org>, Health Affairs Today
<[link removed]>, and Health Affairs Sunday
Update <[link removed]>.  

Project HOPE <[link removed]> is a global health and
humanitarian relief organization that places power in the hands of local
health care workers to save lives across the globe. Project HOPE has
published Health Affairs since 1981.

Copyright © Project HOPE: The People-to-People Health Foundation, Inc.

Health Affairs, 1220 19th Street, NW, Suite 800, Washington, DC 20036, United States

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