Over the next 40 years, the number of Americans over 65 is projected to double, as the baby boom generation ages into Medicare. With approximately 47.8 million seniors today, by 2060, there will be 98.2 million people age 65 and older, or nearly one in four U.S. residents. 1
There are not only more older Americans, but we are living longer, and many are living with serious chronic conditions. Nearly all health costs are driven by patients with chronic conditions and our government is the payor for almost 30% of these costs. What government does in health care, as regulators, payors, and providers --- matters. 2
As health care continues to take up a larger part of the overall economy and push toward paying for value, greater emphasis on managed care and the success of Medicare Advantage, the private-public option in Medicare — are taking a stronger hold.
Medicare Advantage’s framework offers beneficiaries the choice of an integrated care plan, with a focus on patient-centered primary care, early intervention and care coordination. It means greater simplicity, affordability and enhanced benefits to improve health and well-being for millions of individuals.
As of January 2018, Medicare had 59,176,406 beneficiaries, 20,009,827 of which were Medicare Advantage beneficiaries as of April 2018.3, 4 40% of Part D enrollees are in MA-PD plans in 2018, making up a growing share of the total Part D population.” [Avalere Analysis of 2018 Part D Enrollment, 3/18]
Over the past 5 years, Medicare Advantage enrollment has grown by nearly 50%. In 2017 enrollment in Medicare Advantage grew by 8%. Currently, over a third, or 34% of Medicare beneficiaries are enrolled in Medicare Advantage, and the program is projected to grow. 5 Medicare Advantage enrollment growth has been spurred by strong enrollment growth in employer-sponsored retiree plans, called “EGWPs”, as well as Special Needs Plans (SNPs). 6
Beneficiaries in Medicare Advantage have diverse backgrounds and health needs. Over 20% of Medicare Advantage enrollees are minorities compared to 17% in FFS Medicare. 46% of Hispanic beneficiaries and over 35% of African-American Medicare beneficiaries choose Medicare Advantage. [BMA Medicare Advantage Enrollment Guide, 10/17]. Nearly half of Medicare Advantage beneficiaries have annual incomes of less than $20,000.” [BMA Medicare Advantage Enrollment Guide, 10/17]
Access & Affordability
In 2017, 99% of Medicare beneficiaries had access to a Medicare Advantage plan, 84% of Medicare beneficiaries had access to a Medicare Advantage plan that includes Part D coverage, and 90% of Medicare beneficiaries resided in counties served by at least one type of SNP. 7
In 2017, Medicare Advantage beneficiaries were enrolled in almost 3,300 plan options offered by 185 organizations across the country. 8 Medicare Advantage’s framework allows flexibility to cover more services and benefits than Traditional FFS Medicare. Medicare Advantage beneficiaries choose plans based on premiums, cost-sharing, covered services, provider networks, and the plan’s quality rating.
CMS estimates the Medicare Advantage average monthly premiums will decrease by $1.91 to $30 in 2018. Over the past three years, the average monthly premiums in Medicare Advantage have decreased, from $32.91 in 2015.” 9
Evidence shows in some cases out-of-pocket costs are lower for beneficiaries in Medicare Advantage compared to those enrolled in Traditional FFS Medicare. Click here to view comparative analysis of California-specific data on out-of-pocket costs between Medicare Advantage and Traditional FFS Medicare.
In addition, the number of Medicare Advantage health plans offering vision, dental, and hearing benefits not offered in Traditional FFS Medicare has increased. [Avalere Analysis of 2018 Medicare Advantage Enrollment, 3/18]According to CMS, over 97% of Medicare Advantage plans offer at least a vision, hearing, or dental benefit and half of Medicare Advantage plans offer all three benefits. Vision benefits are the most commonly offered additional benefit, with about 94% of plans offering a vision benefit. 10
Medicare advantage is better than Traditional FFS Medicare at controlling beneficiaries costs. The National Bureau of Economic Research found that healthcare spending is 25% lower for Medicare Advantage enrollees than for enrollees in Traditional FFS Medicare in the same county with the same risk score. 11 In 2018, about 70% of Medicare Advantage plans bid below Traditional FFS Medicare spending. Medicare now spends nearly the same amount on average for MA as it does for Traditional FFS Medicare [MedPAC, 3/18]
In addition to payment parity, evidence is growing that cost efficiencies in Medicare Advantage slow costs in Traditional FFS Medicare. When more beneficiaries enroll in Medicare Advantage plans, hospital costs decline for all Medicare beneficiaries. 12, 13 Medicare Advantage has positive spillover effects on the Medicare system, delivering cost savings for beneficiaries and for the Medicare Trust Fund.
In fact, Medicare Advantage enrollees are significantly less likely than Traditional FFS Medicare beneficiaries to have avoidable hospitalizations, with a 10% decrease in the rate of such hospitalizations.” 14 A study showed the risk-adjusted 30-day readmission rate among Medicare Advantage enrollees was 13% to 20% lower than the rate in Traditional FFS Medicare. 15
Another study found the average length of stay for Medicare patients younger than 65, eligible for Medicare based on disability or end-stage renal disease, was 12.4% shorter for beneficiaries in Medicare Advantage as compared with those in Traditional FFS Medicare. 16
The Star Ratings System in Medicare Advantage plays a critical role in promoting quality, ensuring public accountability, and giving beneficiaries the tools to choose high-quality plans. Star Ratings evaluate Medicare Advantage plans on 1-5 scale, with a 5-Star rating being the highest quality and performance is based on 48 health plan and prescription drug-specific measures including consumer experience. A recent study found Medicare Advantage operating within three diverse states provided substantially higher quality of care than FFS Medicare in all 16 clinical quality measures examined. 17, 18, 19 [Part C &D Star Ratings Measures, 2018]
Most Medicare Advantage beneficiaries are in high-quality plans. Star Ratings allow beneficiaries to make choices based on plan performance which are displayed online on Medicare Plan Finder to assist beneficiaries and their caregivers in comparing plan options. In 2018, approximately 73% of beneficiaries are in Medicare Advantage health plans rated 4 stars or higher. Medicare Advantage Star Ratings moved the percent of individuals in high-quality plans from 24% to 73% in just 8 years.
Medicare Advantage plans with at least a 4-Star rating receive quality bonus payments on the rebates which are required by law to directly benefit beneficiaries. Rebates and bonus payments enable Medicare Advantage plans to invest in innovations, including home-based care, risk stratification to identify high need patients, care management, wellness programs, and telemedicine
High-value care is accomplished through innovations in care delivery and dynamic payment arrangements. Emerging value-based arrangements in Medicare Advantage focus on care teams and the identification of high risk, high need patients. Most Medicare Advantage plans and providers have value-based arrangements in place. In a recent study, 54% of family physicians indicate their practices participate in value-based payment models. 20, 21
Value-based contracting can promote smarter health care utilization patterns and improve clinical outcomes among beneficiaries with chronic conditions. 22Providers surveyed in a Deloitte report stated that high disease burden in Medicare Advantage can present greater opportunities for savings and quality improvements. 23 Another recent study found value-based contracting in Medicare Advantage generated costs savings and 32% lower risk of death. 24, 25, 26
Research consistently demonstrates that Medicare Advantage beneficiaries have better health outcomes and higher rates of return to the community than those enrolled in Traditional FFS Medicare. For example, one study showed emergency room visits were 25% lower for Medicare Advantage beneficiaries, and another study showed Medicare Advantage helps beneficiaries have more healthy days in the community. 27, 28
There is also evidence that rates of annual preventive care were 25% higher in Medicare Advantage than in Traditional FFS Medicare for some of the most vulnerable seniors. 29
BUILDING THE EVIDENCE: KEY RESEARCH (Chronological Order)
Studies have shown that Medicare Advantage plans drive down medical costs in the healthcare system. A three-year Medicare Advantage cancer management program provided $3 million in savings, while maintaining high quality. 30
Medicare Advantage beneficiaries with diabetes enrolled in a diabetes-focused Chronic Condition Special Needs Plans (C-SNPs) are more likely to receive primary care services, less likely to have a hospital admission, and more likely to be adherent to their antidiabetic medications and receive diabetes-specific testing than beneficiaries enrolled in non-SNP plans. 31
One study comparing enrollees in a Medicaid-only program and those in a fully integrated Medicare-Medicaid program found enrollees in the integrated program were 48% less likely to have a hospital stay. 32
University of Michigan researchers also found that Medicare Advantage plans were largely able to eliminate disparities for risk-factor control for hypertension, cardiovascular disease, and diabetes in Western states from 2006 through 2011. 33
RAND researchers found that Medicare Advantage plans have had positive trends in closing racial/ethnic disparities in quality of health care HEDIS measures between 2008 and 2012. 34 Women in racial and ethnic minority groups have higher mammography rates in Medicare Advantage than in Traditional FFS Medicare. 35
Racial/Ethnic disparities in primary care quality may be lower in Medicare Advantage than in Traditional FFS Medicare. 36
Data show a 19% reduction in hospital inpatient days and a 28% reduction in hospital admissions for chronically ill C-SNP diabetic patients in Medicare Advantage as compared to Traditional FFS Medicare diabetic patients. 37
Growth & Support
Medicare Advantage is successful because policymakers, health plans, providers and beneficiaries alike recognize the value achieved by a fully integrated care delivery system. Medicare Advantage beneficiaries report very high levels of satisfaction: 92% of Medicare Advantage beneficiaries are satisfied with their coverage and 81% of beneficiaries said they believe they experience better health outcomes with Medicare Advantage. Providers are also increasingly realizing the value of the capitated, integrated model offered under Medicare Advantage. In 2016, providers represented 58% of new Medicare Advantage (MA) organizations entering the program. 39 According to American Medical Group Association members, capitated payments to providers in 2017 increased by 21% and members expect Medicare Advantage and Traditional FFS Medicare revenues to be essentially equal by 2019. 40
Medicare Advantage boasts high popularity including from Congress. In 2018, over 360 members of Congress signed letters in support of Medicare Advantage.
CMS: “Medicare Advantage remains a popular choice among beneficiaries and has high satisfaction ratings.” 41
“I think [Medicare Advantage] is a great option for our seniors.”
HHS Secretary Azar, 42
“The success of Medicare Advantage and the prescription drug program demonstrates what a strong and transparent health market can do—increase quality while lowering costs.”
CMS Administrator Seema Verma, 43
CMS: “Medicare Advantage has been successful in providing Medicare beneficiaries with options so that they can choose the healthcare that best fits their individual health needs. The Medicare Advantage program demonstrates the value of private sector innovation and creativity…” 44
MedPAC: “The Commission strongly supports the inclusion of private plans in the Medicare program; beneficiaries should be able to choose between the traditional FFS Medicare program and alternative delivery systems that private plans can provide. Because Medicare pays private plans a per person predetermined rate rather than a per service rate, plans have greater incentives than FFS providers to innovate and use care-management techniques.” 45
“Medicare Advantage is an important component of choice for Medicare-eligible Americans…The intrinsic value of MA is that people enrolled in the program receive coordinated care, thus improving their chances of staying healthy or recovering from their illnesses.”
Former Secretary of HHS (2009–2014) Kathleen Sebelius 46