Medicare Your Coverage Options

The danger of letting Medicare Advantage plans divert money away from medical care

Written by Diane Archer

The 2018 Chronic Care Act allows Medicare Advantage plans to offer enrollees non-medical services that may improve health and patient safety. However, the danger of letting Medicare Advantage plans divert money away from medical care is serious.  As a rule, Medicare Advantage plans already shift costs to their sickest enrollees, often steering them back to traditional Medicare or into poor quality nursing homes. If they can spend more money on non-medical care, it could easily mean they spend less money on complex care, jeopardizing access to needed care for enrollees in poor health.

Contrary to what PBS suggests in its story on this new policy, Medicare Advantage plans generally do not manage medical care or, if they do, they manage it poorly. A Commonwealth Fund report argues for providing better incentives to these plans to deliver better care. But is that possible? Their shareholder returns depend upon their spending less on care, which generally means delaying or denying care to people in poor health.

An article in the NEJM by Amber Willink and Eva DuGoff highlights the risks of changing Medicare Advantage policy to allow these commercial plans to provide non-medical care. These plans design their benefits to attract healthier people and steer clear of people with costly conditions. In the authors’ words, “It will be critical for CMS to oversee the design and marketing of supplemental benefits.” But, exactly how will they do that and how many people with costly needs will be hurt in the meantime?

In its report about the new Medicare policy, PBS buried the lede: Medicare Advantage plans tend to do everything in their power to deter people with costly needs from enrolling and to encourage enrollees to disenroll if they need costly care. If they are allowed to shift even more costs onto people who need complex care and spend money on non-medical benefits that attract lower-cost enrollees, they may put their enrollees at serious risk.

Moreover, where’s the data to show that Medicare Advantage plans tie services to health outcomes as PBS asserts? Medicare Advantage plans do not tend to share their data. Indeed, they rarely if ever allow researchers to tie their services to health outcomes and report on their findings.

To be clear, government investment in the non-medical social determinants of health, including good housing, nutrition, transportation and the like is smart and helps promote good health outcomes. But, that is not what this new policy is doing. Rather, it is appears to allow Medicare Advantage plans to play fast and loose with taxpayer money. It is not at all clear they will be accountable for their spending.

We should not blame Medicare Advantage plans for their behavior. Their shareholders would be up in arms if they did not discourage people with costly conditions from enrolling. And, these commercial plans would lose money if too many people with cancer and heart disease and stroke enrolled in their plans.  But, that’s the reason you should avoid them if you can afford the supplemental coverage you need to protect yourself with traditional Medicare. And, it is the reason the government should not trust them with taxpayer money to decide how to invest in non-medical care.

People in Medicare Advantage plans, particularly for-profit plans, take a gamble. They risk not being able to see the specialists and use the specialty hospitals they know and trust if they get sick in their communities. What’s worse, they may lose access to centers of excellence. They risk tremendous out-of-pocket costs if they develop complex conditions. And, they risk having to pay out of pocket for their care if they get care out of their area.

Deductibles and copays in a Medicare Advantage plan can be as high as $6,700 a year, which the federal government, many educators and journalists fail to highlight. And, if you need care in December and January, you can be talking nearly $14,000 out of pocket.

By design, Medicare Advantage plans cannot deliver the high-value care that people with Medicare need.  If a bunch of well-intentioned people decided to open the best Medicare Advantage plan for older people with stroke, heart disease and cancer, it would be out of business before it opened its doors. Everyone with these conditions would flock to it, and it would have to raise premiums to cover its costs. People who were healthy would leave for a plan with lower premiums, which would drive up the good health plan’s premiums further.

Medicare Advantage plans could not survive if traditional Medicare, like Medicare Advantage, had a catastrophic cap. That’s likely why traditional Medicare does not have a catastrophic cap. Policymakers either want traditional Medicare to die, or they do not understand the risks Medicare Advantage plans pose.  In part, it is because they have little clue how Medicare Advantage plans are performing. Let’s not pretend otherwise.

Here’s more from Just Care:

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1 Comment

  • Thanks for the report. Both my husband and I are on Medicare Advantage plans. I do know that traditional supplemental plans (with very high monthly premiums and going up every year) can deny you as a customer if you have medical issues they don’t like to cover. My husband was rejected at one point for having slight anemia – once we presented evidence that it was corrected with iron supplements and was not connected to cancer, they then accepted him again. But the next year he switched to MA. The options out there are not good if you are on a limited budget and have health issues. Single payer medical insurance should be enacted, and soon.

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