Medicare Advantage: Unending Scrutiny Over a Popular Program?
When it comes to the Medicare Advantage program, here’s what’s not in dispute: that program, which, under the terms of Medicare Part C, involves the Centers for Medicare and Medicaid Services (CMS) paying private health plans capitated monthly payments for those plans to provide Medicare enrollees with care management and other services, is continuing a steady pattern of growth. As a report published on March 23 by the Chicago-based consulting firm Chartis, entitled “In a Shifting Market, Medicare Advantage Shows Continued Growth: 2023 Medicare Advantage Competitive Enrollment Report,” noted, “Tailwinds that have propelled Medicare Advantage popularity persist as we look at the 2023 plan year. Despite some tumult in the market—from changes to the Risk Adjustment Data Validation (RADV) program, actions from the Centers for Medicare and Medicaid Services (CMS) for select plans, and some headline-grabbing retreats from start-up plans—this year saw record enrollment and pushed program penetration past 48 percent. This year’s growth increased overall Medicare Advantage program participation by 9.5 percent and added 2.7 million beneficiaries. A total of 30.7 million beneficiaries are now enrolled in a Medicare Advantage plan.”
What’s more, noted the report’s authors, all of them Chartis consultants (Nick Herro, principal; Atul Pathiyal, president, Payer Advisory Services; and Julianna Wokurka, consultant), “This year, Medicare Advantage enrollment grew by a record 2.7 million. This is remarkable growth in itself, but it is even more impressive given the continued deterioration of Original Medicare. This year, Original Medicare again contracted by 1.3 million. Since 2019, Medicare as a whole has added 5.1 million beneficiaries, and Original Medicare itself has shrunk by 4 million. Special Needs Plans (SNP) enrollment accounted for one-third of total market growth. SNP enrollment is up 20 percent from 2022, driven by considerable D-SNP enrollment gains.”
Indeed, most experts predict not only that Medicare Advantage will soon push past 50 percent of total Medicare enrollment, but that it will continue to grow as a percentage of total Medicare enrollment, as it has proven very popular with seniors, payers, and providers.
But not everyone’s cheering, and therein lies the rub. Indeed, Donald Berwick, M.D., and Richard Gilfillan, M.D., sparked a heated debate, one that continues to flare up at various moments, when the two policy leaders published an article in the Health Affairs Blog (now rebranded as Health Affairs Forefront), on September 30, 2021, entitled “Medicare Advantage, Direct Contracting, And The ‘Medicare Money Machine,’ Part 2: Building on the ACO Model,” in which they criticized not only the Direct Contracting program under Medicare (since then rebranded as ACO REACH), and some of the core aspects of the ways in which accountable care organizations (ACOs) are managed in the Medicare Shared Savings Program (MSSP), but essentially the fundamental basis on which Medicare Advantage is structured, namely, the fact of Medicare, a publicly funded federal program contracting out services to privately owned corporate health plans. And what mattered in that regard was their prominence: Berwick had served as Acting Administrator of CMS from July 2010 through December 2011, and Gilfillan was Director of the Center for Medicare and Medicaid Innovation (CMMI; now primarily referred to as the Innovation Center) from 2010 to 2013. So their opinion mattered. What’s more, Gilfillan and Berwick came out swinging again on June 6, 2022, in a new Health Affairs Forefront article entitled “The Emperor Still Has No Clothes: A Response To Halvorson and Crane,” in which they fired back at George Halvorson and Don Crane, two leading lights in the industry who had severely criticized their original September 2021 Health Affairs piece.
There’s a huge amount of detail and nuance in all the arguments made by all the parties involved, but at its heart, the debate involves the question of whether it is fundamentally legitimate to continue growing a public program through a public-private enterprise that is rewarding private health plans with bonuses for providing services to the enrollees of the public health insurance program. Or, as Berwick and Gilfillan put it last June, “As we point out, the Medicare Payment Advisory Commission (MedPAC) and many others have documented that MA costs more than fee-for-service. Every extra dollar paid to MA plans is, indeed, a transfer of taxpayers’ money to MA plans, which then benefit in terms of growth and higher profits. Those profits represent direct transfers of wealth from taxpayers to plans. Medicare beneficiaries, as well, pay for this subsidy. Of every extra dollar paid to MA plans, CMS actuaries allocate approximately 58 percent to Part B costs.”
Without sinking into a very deep mire of “they-said-they-said” back-and-forth assertions, what’s important to understand is that a fierce policy debate continues forward, even as the Medicare Advantage program continues to evolve forward and be refined. And though a small number of members of Congress have sided with Berwick and Gilfillan and demanded changes to MA, or at least a thorough examination of how the program is structured and some potential reform of its incentives, for the most part, it appears that MA will continue forward and at the very least, not be ended, as Berwick and Gilfillan and some others would wish.
Policy pushback against the policy pushback
Indeed, numerous policy and industry leaders are taking issue with the assertions that Berwick and Gilfillan have made, and their points of view are both pragmatic and based on policy concerns. “Let’s keep in mind that traditional Medicare still lives in indemnity insurance,” says Susan Dentzer, president and CEO of America’s Physician Groups (APG; in 2022, she succeeded Don Crane as APG’s top executive). “We know there are longstanding concerns about fee-for-service with regard to any potential to drive towards value,” Dentzer notes. “And though they’re focusing on quality, they’ve still got a ways to go,” she says, referring to the administrators managing traditional Medicare. “And let’s face it: the benefits package isn’t so great. I often compare it to homes you see driving through New England, where someone took at an old barn and added pieces to it cobbled together. So it looks kind of like a ramshackle old New England homestead,” lacking important benefits such as vision and dental coverage, and catastrophic coverage, and lacking the flexibility to provide those benefits.
Importantly, Dentzer notes, care management is one of the fundamental elements that MA has that traditional Medicare lacks; and that CMS continues to add flexibilities to the MA program, so that health plans can not only offer dental and vision benefits, but now can provide benefits including food and transportation. There is also a level of health equity implicit in how MA works, she argues, given lower premiums and out-of-pocket costs compared to fee-for-service Medicare. “Black Medicare beneficiaries,” she points out, “are spending more than $1,000 less per year out of pocket.” And, Dentzer says pointedly, when it comes to the core assertion that Berwick and Gilfillan make, that Medicare Advantage is essentially taking public funding and transferring it to for-profit health plans (though not all plans participating in MA are actually for-profit, in any case), “That is an old, old, old debate going back to the origins of my career, there’s always been a debate over whether how much is too much when it comes to profit in healthcare. And it’s always interesting—what else is totally necessary for people, food, housing? We don’t spend a lot of time debating the origins of the healthcare system in charity systems.” Importantly, she notes, “We might complain about price gouging, but we don’t demand that the producers of food produce food at cost, do we?”
Regular changes, practical opportunities seen
In fact, as Dentzer and others point out, CMS officials see the Medicare Advantage program as a work in progress, and continue to make changes to it. Just this spring, on April 5, officials made several significant changes to the program, through the release of a final rule, including streamlining prior authorization processes to avoid disruptions in care and enhancing behavioral healthcare providers’ ability to participate in the program, among other changes.
Indeed, all those interviewed for this article agree that there is a huge amount of opportunity for progress of all kinds in Medicare Advantage. On a practical level, says Soumi Saha, senior vice president of government affairs at the Charlotte-based Premier Inc., “The way that Premier is approaching it is that Medicare Advantage is here to stay; what we are trying to understand is how the growth of MA impacts other models, such as ACOs, for example. So how do we account for the growth in MA, but balance that with overall growth in value-based care models, and ensure equitable movement? We want to continue to move forward with alternative payment models, but make sure the forward movement is equitable.” In that regard, her colleague Nathan Ingram, Premier’s director of payer policy, notes that “CMS and the Innovation Center are investing a lot of resources in testing some really innovative models in transforming healthcare. Assuming the growth of MA continues on an upward trajectory, we want to make sure CMS and others evaluating the models are taking that growth into account.”
Looking at the complex set of issues around payment, payment incentives, and quality measurement, Atul Pathiyal, president of payer advisory services Chartis, says, “I agree that it’s all complicated. I think the emphasis on ensuring health outcomes and a level of quality of care that is appropriate and industry-leading for this population, is important. We also know that measuring that quality requires constant tuning and iteration. We’re continuing to develop new and additional ways to evaluate; that’s a work in progress. But we’ve got several years of experience, and there’s a cohort of individuals who have selected this program and continued with it, so that’s a key factor that needs to be considered when looking at the program’s success.”
What’s more, Pathiyal says, “Especially with the rate announcement just released, I’m noting that there will be changes across benchmarks, Stars methodology, risk adjustment—and there needs to be continued analysis on that front. But the broad framework in my opinion seems to be working. I come back to the fact that we have 30-plus-million enrollees who seem to be happy with the program. Another important element is the level of innovation we’re seeing. With the number of plans entering the market, and the technologies, and data, and care models they’re bringing into the market, they’re able to develop offerings carefully designed for populations with unique needs, and it’s no longer a one-size-fits-all model”—and that factor will be key to improving the program’s responsiveness to enrollee needs, he says, with “aligning around national standards for reporting requirements for providers” a key element in that effort.
Regional and provider perspectives
Meanwhile, health plan leaders themselves are quick to note the diversity of health plan types engaged in MA. One such leader is Angela Perri, chief Medicare officer at UPMC Health Plan, the health plan that together with the Health Services Division makes up the Pittsburgh-based UPMC integrated health system. “Where CMMI is going with their ten-year plan and focus on diversity and on equity, that absolutely already happening, among regional health plans, particularly with MA,” Perri notes. “We’re able to tailor benefits plans to different communities, rather than through generic plans.” In that regard, she stresses, “Not all MA plans are the same any more than hospitals or medical groups are the same. We are a five-star plan and have been a five-star plan for two years with our HMO and PPO plans and a four-and-a-half plan with our special needs population of dual eligibles. We have 40,000 members in SNP, and designed that for that very, very vulnerable population. We customize and tailor the plans and benefit designs for that population. So from a value perspective, are there bad actors who are standardizing maybe a little too much? That’s something to look at, but what we look at from a benefits design view is, on both formulary and the benefit design itself, we look at the services that our patient populations are actually using.”
And when it comes to the provider organizations involved in contracting around value, Scott Hines, M.D., chief quality officer and medical director, Medical Specialties Division, at the Middletown, New York-based Crystal Run Healthcare, a multispecialty medical group with 15 major locations in upstate New York, says flatly that “What we’re being asked to do is build a rocket ship that will get us to Mars, but then pay us when we get back; that’s what the Shared Savings Programs feels like; payment is so far after you deliver the care and achieved the results that you’re actually compensated for that, that it makes it very difficult to be able to invest in the infrastructure and technology necessary to succeed in value. And if you want to have a healthcare system that rewards accountability for high-quality care and outcomes and not just the stuff that we do, then you need a payment model that focuses on that. And right now, MA is the best model to focus on” for groups like his.
Meanwhile, Darryl Drevna, senior director, regulatory affairs, at the Alexandria, Va.-based AMGA (American Medical Group Association), the nationwide association representing the largest and most advanced multispecialty medical groups participating in value-based contracting, says that “Our members really like MA for a host of reasons. One is the regulatory flexibility: you work directly with a payer, and you can build a care plan and a benefits package around a specific population; you just can’t do that in fee-for-service Medicare.” She notes that the flexibility built into MA simply cannot be replicated in traditional fee-for-service Medicare; nor, she adds, can health equity issues be addressed.
As for future changes to the program that CMS might make, Drevna says that “We’re going to have to wait to see what CMS does, once they finalize this” set of regulatory changes. “And there’s always a new bite of the apple to take. There are definitely concerns in Congress that they’re over-paying, and they want to be good stewards of the dollar. And we’re saying that they’re taking an overly aggressive approach to this situation, and if they have concerns, they can work with us and our member providers to craft a policy that works for both CMS, payers, providers, and ultimately the patients.”
So what’s guaranteed is that, as long as the Medicare Advantage program continues forward, incentives, benchmarks, and quality measures will continue to be modified and to evolve forward. But, say health plan and provider leaders, Medicare Advantage is simply delivering too much to too many beneficiaries, with too-clear results, for the program to be ended and for traditional fee-for-service Medicare simply to be allowed to remain in place without reform. The future will bring complex new developments, everyone agrees; but no one sees MA simply disappearing or being toppled anytime soon.
