How did Medicare Advantage become a very successful social services program for millions of people who really need help without anyone noticing that it was happening?
Medicare Advantage is an alternative way of people enrolling in Medicare. Instead of simply buying each piece of care by the piece like traditional fee-for-service Medicare, the government pays Medicare Advantage plans a fixed amount of money each month — a capitation payment — for each person enrolled in a plan.
The capitation payment is based on the age, gender, area of residence, and health status of the people who enroll. The capitation is lowest for the people who have no health conditions and it goes up based on the health status of people enrolled.
The amount of money paid has been targeted to be 95 percent of the average area per capita cost of buying for care for people with standard fee-for-service Medicare in each area.
The plans who are paid the capitation can use that money in flexible ways to pay for services that are not on the standard Medicare fee schedule — like in home nursing care or electronic linkages between care givers — and each plan can put together the care teams needed to both deliver care and improve the health status of their members.
Plans do things like identifying which patients are at high risk of having an asthma attack or having a congestive heart failure crisis and they intervene at the patient level to reduce patient risk and to improve patient care.
Care is much better for a congestive heart failure patient if you have a care team who knows you are at risk and who is working with you to reduce the risk. It is ugly, painful, functionally disruptive and sometimes frightening to a patient to have those kinds of crisis happen, so the Medicare Advantage plans are very well regarded by their patients for doing that work.
Standard fee-for-service Medicare does not do any of that work — and standard fee-for-service Medicare will charge a nurse with billing fraud if the nurse helps a congestive heart failure patient or an asthma patient in their home and then bills Medicare for having helped the patient.
Patients with all types of chronic conditions do better with Medicare Advantage.
But that higher quality of care in the Medicare Advantage plans isn’t what is surprising people the most about Medicare Advantage right now. Everyone who knows care in any functional way knows that the care is far better for Medicare Advantage patients.
What is surprising some people today is who is enrolling in Medicare Advantage.
Two out of three very low-income Medicare members have now joined Medicare Advantage plans. More than 60 percent of the African American Medicare members are now in plans and over 70 percent of the Hispanic Medicare members are in plans.
The average net worth of the white Medicare members who buy supplemental coverage rather than enroll in the plans exceeds $200,000, and the average net worth of the Hispanic members of Medicare Advantage is now under $14,000, so the differences between the two approaches to care and benefits is increasingly important to large numbers of people and the satisfaction levels for those patients is running at 95 percent in the most recent quality scores.
The fact that Medicare Advantage has both significantly better benefits and lower costs is extremely relevant to all of the low-income Medicare members whose lives are far better at several functional levels when those benefits exist. They all have pharmacy coverage linked to their plans and they have vision care, dental care and hearing care benefits can be very life enhancing for people who have extremely low-income levels and extremely low financial resources and need those services.
Medicare Advantage takes capitation payments that now run 15 percent or more below the average cost of fee-for-service Medicare in every county, and they use that lower cash flow to offer far better benefits and much better care.
So there is an immediate and highly visible benefit difference and cost level difference for those patients. There is also a less visible functional benefit that is even more important for many of those enrollees that we all need to understand.
Many of the Medicare Advantage enrollees are now getting team care — patient focused team care — for the first time in their lives. That is not an overstatement or an exaggeration. It’s a reflection on how fee-for-service traditional Medicare functionally works.
Traditional fee-for-service Medicare does not provide or pay for or support or require any level of team care. Many of the people living in inner city care sites where their community care infrastructure that has been funded by fee-for-service Medicare has no connectivity tools at all are now — as members of Medicare Advantage plans — getting team care from the moment of enrollment and those members are finding it to be significantly better care.
That’s why so many people from those groups are joining plans.
There is also some basic damage repair happening relative to care delivery for a number of those low-income patients and their care sites.
That change in approach for those patients is extremely relevant to many policy people and to care and community leaders who are looking at Social Determinants of Health issues for older Americans for the first time and who want care to be equitable, competent, patient focused, and outcomes oriented even for the people who were not supported by those levels of care in their past.
As a country, we now know and we are beginning to recognize for the first time that we have a number of communities and settings where the care infrastructure has been damaged or perpetually and sometimes intentionally inadequate and under supported by various social determinants of health issues.
We are becoming much more aware as a country that too much of the health delivery in this country has not been entirely equitable or effective in its service of all of our people and we have a greater awareness today of how many health problems for people result from those inequities.
When Covid hit, we had an additional and very reinforcing wakeup call on those issues because we saw the death rate from Covid was literally twice as high across the entire country for our African American and Hispanic populations.
We learned quickly as a country that the significantly disproportionate distribution of chronic conditions that exists for the patients in those populations had a directly proportionate impact on the Covid mortality rate and on the opportunity to provide badly needed team care for millions of people who would have been completely isolated when Covid hit if they had not been enrolled in Medicare Advantage plans.
The timing of that pandemic was particularly relevant to the Medicare Advantage plans because of the disproportionate enrollment for the plans that we now see with both African American and Hispanic patients.
That 71 percent of Hispanics enrolling in Medicare compares to slightly over 30 percent of the white Medicare enrollees who have joined the plans and have very different levels of net assets.
The economic issues are extremely important to many people and they have been completely invisible and not included in either the discussions or the debates about Medicare programming from some of the Medicare Advantage critics who believe and say the plans offer too many benefits because of fairness issues for people who don’t enroll in plans.
That is a very coldhearted way of looking at plans and at people’s lives.
When we look at income levels in the plans, we see that more than two thirds of the total Medicare enrollees who make less than $30,000 a year are now in the plans. We also see that average annual income of the two-thirds of the Hispanic Medicare Advantage members is under $14,000 a year and that number echoes the net worth numbers for those enrollees.
What we know from those numbers and what we can know from almost every other analysis that has been done of social determinants of health in American settings is that the lowest-income people have had the worst care, the poorest linked care, the most medically under documented care, and the lowest levels of equity, availability and service relative to their care and the health status of too many people today has been impaired and damaged by those realities.
Special Needs Plans Take Care of the Lowest-Income Medically Disadvantage People
The disproportionate enrollment pattern is even greater when you look at the people in our country with both the greatest health care needs and the lowest income levels — the people who are eligible for both Medicare and Medicaid.
Those people with dual eligibility for both Medicare and Medicaid have been enrolling in the components of Medicare Advantage that are set up to be Special Needs Plans.
The Special Needs Plans for Medicare Advantage actually enroll the lowest-income Medicare people — the people with Medicaid income levels and with multiple health conditions — and the plans very appropriately and effectively give those patients a consistent, more complete, and quality focused package of coverage in care for the first time ever. That approach is far better for those enrollees than leaving them — totally at the mercy of the non-system that is fee-for-service Medicare with weaker benefits, no care linkages, and no quality agendas for their care.
The Special Needs Plans have been almost invisible in the health care policy discussions and in the Media spotlight. The people who are pushing for a single payer approach that would provide Medicare for everyone as our new national program should definitely figure out how to include the Special Needs Plans in their package because they do so much good for people who clearly need what they do.
Almost five million dual eligible people have now joined Medicare Advantage Special Needs Plans. They are the fastest growing segment of the membership and had almost 20 percent enrollment increases last year.
There is no doubt that many of those low-income and high-need people are actually getting the best care of their lives from those SNPs and we can say that without hesitation or fear of being contradicted or rebutted because everyone who has looked at the care that has been delivered in too many settings up to now knows how problematic, inadequate, and even inequitable too much of that care has been for all of those patients.
Standard fee-for-service Medicare officially and formally refuses to pay for team care — so we know with no question or challenge that those low-income patients were not getting that support or that care as fee-for-service Medicare patients.
Standard fee-for-service Medicare has very unintentionally but very functionally been part of the problem for those underserviced patients. More than 70 percent of the higher income people who aren’t enrolled in Medicare Advantage plans buy supplemental insurance coverage to make up for the $5000 average per member current financial burden and gap that fee-for-service traditional Medicare creates for those people,
But most of the lower income people don’t buy that coverage and those people have significantly higher costs until they join Medicare Advantage plans.
There are some Medicare Advantage critics who oppose the Special Needs Plans and as being both unnecessary and over funded. The program actually costs more than 10 percent less than the costs for those same dual eligible people who are not in plans and have significantly more expenses because of bad care.
Even the most ideological Medicare Advantage critics — the people who are hard on the program for their own rigid and highly ideological reasons because it delivers a much broader set of benefits to members for the same Medicare dollar — should hold their fire and not do things now to damage the care being given to those Special Needs Plan people who deserve to have good care for the first time in their lives and should not be opposed for idiosyncratic fairness issues for the differences in benefits.
Some of those critics attacked the program this year and tried to change the coding levels for diabetic patients because they thought those levels of care were not needed. They were very wrong — and CMS withstood their efforts to make that happen — so we will continue to see that happen.
At a macro level, the interesting and somewhat unexpected reality we see today is that Medicare Advantage has somehow crossed the line into being a social program of sorts and Medicare Advantage is not just an economic alternative anymore because of who has actually enrolled and because of what those people need for support and care to live better and more lives is making such a major difference for so many people.
The Medicare Advantage members — across the board — currently spend about $1600 a year less than people who have fee-for-service Medicare Coverage.
That savings per Medicare Advantage member last year was $1600.
One of the reason that two thirds of the lowest-income Medicare beneficiaries have chosen to enroll in Medicare Advantage plans is that traditional Medicare is not an optimal benefit package and the painful reality is that the average enrollee in that fee-for-service Medicare program incurs over $5000 each year in out of pocket expenses.
Higher-income Medicare members with higher levels of net worth can more easily absorb those out of pocket costs for fee-for-service Medicare — but the lower-income people who are on Medicare benefit significantly by the lower costs, better benefits, and significantly better care that happens in Medicare Advantage plans and we can expect to see that enrollment grow.
Covid should seal the deal for anyone wondering about the significant and relevant differences between fee-for-service Medicare and Medicare Advantage and debating which approach is better for us as a nation and for Medicare enrollees.
The plans responded quickly and directly to the disease. Medicare Advantage plans were among the very first sites in America to have credible Covid tests in place in their care sites, and the plans who put nurses into people’s homes to provide that level of in-home care did it as soon as they could after Covid hit.
By contrast. The Medicare patients who only had fee-for-service Medicare coverage did not have any mechanisms in place steering them to care. Many of those isolated and unconnected fee-for-service Medicare patients may have been frightened and very concerned about what they needed to do as Covid hit to get care. In clear contrast, all of the people who were enrolled in Medicare Advantage plans had care teams, care infrastructure, health educators, and support processes in place for Covid care and all of the follow up from that care.
So Medicare Advantage has crossed another threshold, and met another test and performed extremely well at levels that will be relevant to both policy makers and elected officials going forward working on the future of our care delivery system as a country as Covid has caused us all so much pain.
The Medicare Advantage plans moved immediately to electronic care connections when Covid changed the care site access reality, and those electronic connections with patients are going so well and are so deeply appreciated by patients that they are becoming a permanent part of delivery for Medicare Advantage plans.
The news media who are interested in both the patterns of enrollment and in success in providing Covid-related care compared to the clear failures in those areas of fee-for-service Medicare should have some celebratory and relevant stories to cover for 2022.
For now, we need our policy people and some of our key media people to recognize that Medicare Advantage has become a major asset for the social issues that have damaged so many people for such a long time. By providing team care to the lowest income Americans, Medicare Advantage is becoming the care system for older people from all of those groups who need what the plans have to offer.
Those Medicare members have voted with their feet by joining the plans and they now will probably vote in person to support having all of those additional levels of care if those programs and those processes become threatened in the future.
We should build on this success. We should understand it, celebrate it, and make it even better in the future.
And the 5 million people who are having their special needs met should be protected from having that care taken away by people who resist having the plans going down those paths.
No one expected Medicare Advantage to become a social program.
It happened.
That’s actually good for everyone.
Let’s build on that approach and turn the Medicare Advantage Five Star Plan into a Covid aligned set of reports — and then get anyone who doesn’t enroll in a plan to at least consider an ACO if they are available in their areas. An ACO that breaks even on costs is a far superior use of the Medicare dollar than just throwing that money down the fee-for-service rat holes for care.
And because we know the future of our country will depend on our children, we need to take a biological approach to Medicaid and new births and channel every child born in America into support approaches that build neuron connections by the billions and even trillions at the point in the lives of every child when the children are epigenetically wired to benefit from those interactions.
We need best care for our elders and we need optimal beginnings for our children — and we can clearly and obviously afford to do both. And we also clearly can’t afford not to do either one.
We have now reached the point where the 15 percent discounts from the average cost of fee-for-service Medicare in every county has created record bonuses for the plans in every county and set up the highest level of rebates and refunds in the history of the program.
More importantly, now that we have enrolled over half of the Medicare members in Medicare Advantage plans, and now that we have created both lower costs of care and significantly lower increases year-to-year in the cost of care for enrolled members, we have reached the point where Medicare Advantage is saving the Medicare trust fund.
They projected that the trust fund would run out of money in a decade based on the old enrollment patterns and costs, and we now have both 15 percent lower costs today in every county and a much lower cost trend going forward for those members. The cost trend year-to-year for fee-for-service traditional Medicare members is over 7 percent — and the Medicare trust fund current data says that the Medicare Advantage cost trend is now only four point two percent.
Those are major savings, and those savings functionally actually mean that Medicare Advantage has just saved the Medicare trust fund from going broke. In fact, with the current six point seven percent revenue flow increase that Medicare inherently has every year from its normal sources of revenue, we now have the ability to provide much better care, much richer benefits, and actually strengthen the Medicare Trust fund every year with the costs that now exist for Medicare Advantage and its current funding approach.
Because the payment to Medicare Advantage is a capitation payment and not a stack of fees, the CMS people have absolute, immediate, complete and total control over that capitation number — and now that we have the total costs for Medicare Advantage at that reduced level, that is a number we can be completely comfortable with to actually save Medicare.
When Medicare Advantage is more than half of the enrollment and when we know that the Medicare Advantage costs are only going up four point two percent this year, the arithmetic of the situation says those costs for all of those members save the trust fund.
The Medicare Advantage critics might hate having Medicare Advantage save Medicare, but we need them to realize that Medicare needed to be saved and they should give up their ideological opposition to the approach because it actually works so well.
And we need to get as many people as we can into the special needs plans because they are half as likely to go blind and less than a third as likely to have an amputation if they are enrolled in a plan.
Amputations cost billions of dollars. They cost over $100,000 per amputation. The basic truth is that 90 percent of those amputations are caused by foot ulcers and you can prevent 40 percent of the foot ulcers with dry feet and clean socks — and every plan makes that happen for their members.
Let’s get everyone into the special needs plan who should be there.
And let’s also support ACOs for other Medicare enrollees.
We need the people who continue to enroll in fee-for-service Medicare to get to as many accountable care organization settings as they can — because those caregivers all provide much better care than the other caregivers in their communities. We should support ACOs wherever they exist.