The studies are of interest to anyone concerned about health care and public spending. But for Rhode Island, where Medicare Advantage plans cover a third of Medicare beneficiaries – the fourth-highest rate in the nation – they’re particularly relevant.
The bottom line, as the journal Health Affairs put it in a news release, is that while Advantage plans have expanded Medicare beneficiaries’ options, “they have also created more complexity, generated negligible gains in quality, and added to the costs” to taxpayers.
It’s not the best report card to get at a time when President-elect Barack Obama and Democratic congressional leaders are eying the Medicare Advantage program for potential cuts as part of an effort to rein in spending and maintain Medicare’s viability.
The rates the government now pays private insurers for Advantage enrollees, Obama said in a debate on Oct. 15, are too high and “just a giveaway” to the industry.
Yet insurers and Acting Centers for Medicare & Medicaid Services Administrator Kerry Weems disagree, noting that Advantage helps enrollees in many ways, from reducing their out-of-pocket costs to improving and better coordinating the care they receive.
But do the three studies published last month by Health Affairs actually resolve that disagreement? And what implications do they have for Rhode Islanders, who have 24 choices this year for Medicare plans, from the traditional fee-for-service benefit, to Advantage plans with premiums as high as $198 a month?
For starters, none of the studies outright condemns the Medicare Advantage program or says it’s bad for beneficiaries. Instead, the studies focus on whether taxpayers are getting the best bang for their buck.
Enrollment in Advantage plans has more than doubled in just over four years, one study notes, from 5.3 million in December 2003, or 5.3 percent of the Medicare population, to the current 10.1 million. In Rhode Island, a recent Mathematica Policy Research analysis put the Advantage penetration rate at 34 percent. In Massachusetts, it was 16.5 percent.
Locally, Blue Cross & Blue Shield of Rhode Island dominates the Advantage market, with about 40,000 enrollees, according to Ray Brown, assistant vice president for program management.
But there are many more players, from UnitedHealthcare of New England, which offers plans in partnership with the AARP and through several subsidiaries, to insurers that aren’t active in the local commercial market, such as Aetna and Coventry Health Care.
And while Blue Cross offers only HMO and PPO plans, several others now offer private fee-for-service plans, now the fastest-growing kind of Advantage plans nationwide, accounting for 48 percent of new enrollment in the last three years.
Such plans are attractive to Medicare beneficiaries because they’re wide open, unlike HMOs with limited networks and PPOs with higher rates for out-of-network services.
But private fee-for-service plans also cost the government the most and provide the least added value, a study by a consultant and an analyst at the Medicare Payment Advisory Commission found: Insurers’ bids for such plans for 2008 were, on average, 108 percent of projected Medicare spending for their service areas, compared with 99 percent for HMOs, and the extra benefits they provided had an average value of $55 per month, versus $104 for HMOs.
Another study, by Marsha Gold, a senior fellow at Mathematica, noted that not only do those plans fail to coordinate care as Advantage was meant to, but they’re also undermining the market for HMO plans, which still have 70 percent of enrollment but used to have 84 percent.
These plans, especially for sicker seniors, really can make a difference. United, for example, works closely with congestive heart failure patients to monitor their health, even putting scales in their homes to watch for sudden weight changes. Blue Cross is equally hands-on with diabetics, and it offers extra screenings at no cost to beneficiaries.
Blue Cross in particular has done such a good job with Medicare Advantage that it was ranked No. 6 in the nation this year in U.S. News & World Report’s “America’s Best Health Plans,” with particularly high scores for screenings, controlling high blood pressure and avoiding adverse drug interactions, among other measures.
Asked whether potential payment cuts could hurt Blue Cross’s Advantage plans, Brown said it’s “premature” to speculate on what the Obama administration or Congress will do.
But health management is an essential part of these plans, Brown added. So should cuts be made, “the last place where we want to make any changes is in areas that affect the health status of our members.” •
