Medicare Advantage in a Changing Health System

December 5, 2014

Almost three in ten Medicare beneficiaries are enrolled in the Medicare Advantage (MA) program, which offers a choice of competing private health plans – typically managed care plans such as HMOs and PPOs. The Affordable Care Act (ACA) made significant changes to the way Medicare Advantage plans are paid, including tying a portion of payments to a quality star rating system. Despite predictions that MA enrollment would drop in the wake of scheduled payment reductions to the program, the percentage of seniors who are choosing to enroll in MA plans is still growing. However, the impact of upcoming reductions remains the subject of much debate.

How is the Medicare Advantage program structured? How is it financed? What are other important provisions for quality of care, risk adjustment, network adequacy, and beneficiary protections? What changes did the ACA and subsequent federal law make to Medicare Advantage? What is the outlook for competition, quality, and affordability? What are the current policy debates surrounding the MA program?

A distinguished panel of experts addressed these and related questions:

If you were unable to attend the briefing, here are some key takeaways:
Arielle Mir, assistant director, Medicare Payment Advisory Commission (MedPAC)
Currently, 28% of Medicare beneficiaries are covered through Medicare Advantage, and in 2014, beneficiaries had an average of 10 plan choices per county, said Arielle Mir. Plans are paid a monthly per-enrollee amount to provide Medicare Part A and B benefits; payment amounts are based on plan bids relative to fee-for-service benchmarks that are calculated on a county-by-county basis. On average Medicare pays about 6% more for an enrollee in Medicare Advantage than they would if a comparable enrollee were in fee-for-service Medicare. Medicare Advantage plans can receive higher payments based on a star rating system derived from clinical quality and consumer satisfaction measures.
Mark Miller, executive director, Medicare Payment Advisory Commission (MedPAC)
Medicare Advantage offers a vision in which managed care plans create savings relative to fee-for-service Medicare by forming networks, negotiating rates with providers, coordinating care, and conducting utilization management, said Mark Miller. The alternative vision of private plans in Medicare was that managed care, and extra benefits, should be offered for everybody, which requires managed care plans to be subsidized in areas of the country where fee-for-service utilization is low. Payment reforms enacted through the Affordable Care Act in 2010 more closely aligned Medicare Advantage and fee-for-service payments. There has been 9% annual growth in Medicare Advantage enrollment since that time, along with continued wide availability of plans, and on average, managed care plans are now bidding below the fee-for-service benchmark, with HMOs more likely to do so than other types of plans.
Marsha Gold, senior fellow emeritus, Mathematica Policy Research
Existing studies that compare quality and access between Medicare Advantage and traditional Medicare tend to be based on relatively old data and a limited set of measures, pointing to the need for more timely, comparable data and information, said Marsha Gold. On average, HMOs perform better than traditional Medicare on preventive services, and Medicare HMO beneficiaries were less likely to have potentially avoidable hospitalizations than beneficiaries in traditional Medicare. Evidence on readmissions is inconclusive, with findings differing across studies and many lacking important adjustments for potentially confounding factors.
Robert Margolis, CEO emeritus, HealthCare Partners
Medicare Advantage is focused on care coordination, preventive care, and total patient wellness in ways not possible under fee-for-service Medicare, said Robert Margolis. The risk based payment structure under Medicare Advantage incentivizes coordinated care and the investment of savings from lower admissions and readmissions back into patient-centered care. There is nothing comparable to the Medicare Advantage quality rating system in traditional Medicare, he added.
Private insurance plans delivering services to people enrolled in Medicare enrolled about 16 million beneficiaries in 2014. Most were enrolled in managed care plans such as HMOs or preferred provider organization (PPOs), that receive funds from the federal government to provide Medicare-covered benefits to those enrolled. Study here:
Ed Howard of the Alliance for Health Reform moderated.
Ed Howard of the Alliance for Health Reform moderated.

Twitter: #MedicareAdvantage

Contact: Sarah Dash (202)789-2300


Full Transcript (Adobe Acrobat PDF)

Speaker Presentations

Arielle Mir Presentation (Adobe Acrobat PDF)
Mark Miller Presentation (Adobe Acrobat PDF)
Marsha Gold Presentation (Adobe Acrobat PDF)
Robert Margolis Presentation (Adobe Acrobat PDF)

Event Details

Agenda (Adobe Acrobat PDF)
Speaker Biographies (Adobe Acrobat PDF)

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