- Medicare Advantage is not producing any savings but spends between 2% and 5.5% more than traditional Medicare, a report in Health Affairs finds.
- On the other hand, the report found Medicare's accountable care organizations are reducing costs as compared to traditional Medicare. The Medicare Shared Savings Program, which includes accountable care organizations, saved about 1% to 2% in 2016.
- The authors suggest a number of changes for policymakers to consider if they want to improve competition and address flaws among the two programs.
As the popularity of programs such as Medicare Advantage grows, it's important to understand the spending ramifications and whether the program is yielding any savings for taxpayers.
More and more seniors are choosing coverage options outside of traditional Medicare. Together, Medicare Advantage and the Medicare Shared Savings Program cover about half of all Medicare beneficiaries. In a six-year period, Medicare Advantage alone grew by 57% and as of 2018 covered nearly 20 million seniors.
Medicare Advantage allows private insurers to contract with the federal government to care for eligible Medicare beneficiaries. Private plans receive a fixed payment — typically a per member, per month allotment — to coordinate care for beneficiaries who choose MA plans.
It's these "predictable" payments that allow MA plans to invest in unconventional coverage options such as meal delivery and transportation to appointments, the authors said.
But despite the program's popularity, it's not yielding the savings that was originally expected.
"When a beneficiary joins MA, Medicare spends more, on average, than it would have if the patient had remained in traditional Medicare. We find the opposite in the MSSP: When a patient joins the Medicare ACO program, Medicare costs fall," according to Health Affairs.
There are also differences between the two programs that should be fixed, the authors said.
The MSSP is only punitive, which is not true for the star-rating program for MA. One way to achieve a more equitable ratings system is to "radically" reduce the number of quality measures, which have become a burden for physicians, the authors said.
"We propose limiting quality measurement to five measures that are outcome oriented: hospital and ER use, patient satisfaction, and diabetes A1c and blood pressure control."
It's also important to find a risk adjustment model that can be used for both MA and MSSP populations, the authors said.
CMS has committed itself to reducing the amount of burden on payers and providers, and paring down quality ratings overhead is a key part of that. The agency's removed a number of measures across its reporting programs in 2018 as part of its "Meaningful Measures" initiative, and is currently looking at others in MSSP, MA and the Merit-based Incentive Payment System.