By GEORGE HALVORSON
The Program has also Helped Millions of Low-Income Retirees with Better Retirement Benefits and Needed Support Services
Medicare Advantage (MA) has saved Medicare. Half of those in Medicare are in MA and their care costs less on average. This means the Medicare Trust Fund is protected against future deterioration because MA’s cost increases continuously run below the average increase in Medicare Trust Fund revenue each year.
The capitation paid to MA plans for each member is based each year on the actual average cost of fee-for-service Medicare in every county. Payments to the plans are now running about 11% below that average cost.
The plans bid capitation levels that are below the average cost of fee-for-service Medicare every year because the plans deliver much better care. The functional truth that most policy people do not know or understand is that better care costs less money, when you design the system and the processes to achieve that result.
Fee-for-service Medicare is expensive and too often is poorly delivered. The fee-based payment model pays more for bad and failed care because when the caregivers are paid only by the piece, they have more pieces to deliver when care fails. They deliver and bill for even more pieces when the health of a member deteriorates. When inferior care creates complications and mishaps more pieces of care are needed for that patient.
Diabetic Blindness Reduced By 60% With Blood Sugar Control
MA plans bid capitation levels every year based on the financial opportunity created by that bad care in FFS. The plans know that diabetic blindness can be reduced by 60% or more if the patients have their blood sugar controlled. The plans set their capitation levels knowing that the average cost of care in every county includes the high level of blindness that happens when FFS providers do not help their patients achieve their blood sugar control goals and thus incur extra expenses for those patients.
The Medicare Advantage program has blood sugar control as a key focus point. That is important and relevant, because the plans can collect the capitation money that was created by no blood sugar controls, and then can and do reduce blindness significantly by achieving that goal. They spend significantly less money on those patients.
The MA payment program is set up to have the plans create financial surpluses from better care and then to have the plans use those surpluses to improve the benefits of their members. The plans create those surpluses and use them to pay for additional benefits–so the Medicare Advantage members have vision benefits, dental benefits, hearing benefits, and various social support benefits that do not exist in the traditional Medicare benefit package.
Those expanded benefits do not increase the cost of Medicare because they are created by the capitation cash flow that runs about 11%–17% below the actual average cost for fee-for-service Medicare in each county. That is a far better use of the Medicare dollar and it is not an additional expense for the program.
The plans identify which patients have congestive heart failure or asthma and then they work with those patients to significantly reduce their crisis levels and improve care for those patients. The MA members with those conditions have much better lives and they have less physical pain, stress, anxiety and damage because they avoid those crises. The better care results in 40% fewer days in the hospital for both of those conditions. Plans save money by having significantly better care for those patients.
Amputation Five-Year Mortality Rate is Over 40%
A major expense for the Medicare program is amputations. We have some of the highest amputation rates in the world for our lower income patients.
MA plans know that 90% of amputations are caused by foot ulcers. You can reduce foot ulcers by more than 60% just by having dry feet and clean socks. So the plans save billions of dollars that create surpluses in their capitation cash flow and they significantly improve the life expectancy of those patients just by providing those services consistently and intentionally to their diabetic members.
The five-year mortality rate for the people who have amputations ranges from 40%–80%. In their attacks on the program MA’s critics never mention those amputation numbers and those important and real death rates .
Special Needs Plans Now Serve Over 6 Million People
MA Special Needs Plans (SNP) just had their enrollment grow to 6.5 million members in January of this year. SNP enrollees are eligible for both Medicare coverage and Medicaid coverage. They have some of the highest health care needs in the country and too often have some of the lowest levels of resources to deal with basic aspects of their lives and their care.
The critics also don’t mention that the SNPs do life changing and extremely beneficial work for the lowest-income and highest-need people in the Medicare program.
Millions of people enrolled in SMP plans have been badly impacted by various social determinants of health issues, as well as by care delivery failures for their entire lives. SNPs are often the first organized care related support that millions of those patients have had for their personal care.
People With Weak Retirement Plans Need the Additional Benefits
Those who look at the Medicare program need to understand and appreciate the fact that the expanded benefit package from the plans is often extremely important and directly relevant to the daily lives of millions of people. They are retired but have few assets and low levels of financial support for their retirement years.
We are no longer at the point where retirees in America can rely on a pension plan and basic retirement benefits after they retire. Fewer than half of retirees today have a pension payment or a deferred compensation plan of any kind. Most retirees have a low cash reserves to use to purchase needed services and benefits in their retirement years.
There is a solid set of reasons why almost 90% of our lowest income Medicare beneficiaries are now enrolled in MA plans. There are also obvious reasons why those numbers include more than 70% of African-Americans and more than 80% of Hispanics. Additionally, MA has language competency requirements for Hispanic enrollees that do not exist for fee-for-service Medicare.
The most current data about retirement benefits tells us that more than half of Black and Latinx households have no retirement savings at all. That data tells us that average Social Security payments for White retirees are hundreds of dollars higher than the benefits for African American and Hispanic retirees. That MA offers higher benefit levels for all members has created realities that are most obvious to low-income enrollees.
If a low-income enrollee has mouth pain and needs dental work and support, FFS Medicare does nothing to help. If the pain for the patient is real and immediate, that steers them into MA plans with dental benefits and it makes those benefits important to the daily life of those members. That mouth pain is likely to be permanently relevant to that patient.
MA plan satisfaction levels are high, and having those much better benefits across that entire spectrum of services is a reason why higher satisfaction levels exist for millions of people.
MedPac, Berwick and Gilfillan, and other critics of MA keep trying to reduce the benefits now offered by MA. They know these numbers and they can see the enrollment distribution patterns and yet those critics carefully avoid those issues in every discussion and report about Medicare and MA.
There is also no mention of amputations in any MedPac or Health Affairs epistles written by those Medicare Advantage critics. The upcoding fantasy that they use to attack the plans about skimming risk is not even possible, much less relevant, as a way of understanding what is happening with the plans.
CMS is doing a great job of running the program and they have significantly enhanced the data and processes they use to pay the plans.
They just did an in-depth analysis of their current data and data sources and data accuracy that they use for developing the rates each year — and they issued their 2025 rating decisions and capitation level determinations for the plans with powerful and useful information in the piece.
They made it clear in their annual report that the cost levels for MA plans for 2025 will go up by 3.3% —not by the 12% that MedPac warned everyone about in their inaccurate and misleading report.
Medicare Advantage Is Creating a New Culture of Care for the Country
We need everyone to understand that the Medicare Advantage five-star quality program is having a very powerful impact on both the processes of care and the culture of care in America. It is game changing and directionally correct for the country.
The Five Star Quality recognitions are becoming the new national standard of care. Because they impact so many settings, the stars ratings are moving care in the right direction in the wide range of places where the plans deliver care.
We have reached the point where the care systems that achieve four or five stars through that program celebrate that information with their own staff as a major internal achievement. They promote and celebrate those achievements with the community they are in so that people in each setting know that they are doing excellent work in making care better for their patients.
MedPac attacks and criticizes that five-star quality program every year and says in their annual attack that the goals are not important or relevant. They also say that the five-star goals should not be recognized as achievements by the plans or used as a quality direction for our nation’s care.
Large numbers of people do not go blind because 90% of MA plans now achieve the blood sugar improvement goals, and the money saved by people not going blind is now spent by the plans to provide free vision benefits to their members. The fact that MedPac completely misses every single component part of that process in their annual discussion of the quality program for Medicare Advantage should cause them to look at the science of care delivery and the tool of process improvement. They should change their conclusions on that issue before they issue their next report.
MedPac should be working on continuously improving care. Yet they do not even mention it in any of their processes or approaches to work with MA plans.
CMS, on the other hand, is appropriately and skillfully working hard to continuously improve care for MA plans and to improve care for all of their other pilot programs. That agenda and commitment by CMS is very good for the country because we could be on the cusp of a golden age for care if we do this right, and we are moving in the right direction.
There is a Medicare Advantage summit in a week or so. The plans at the summit are celebrating a wide range of achievements that we need to understand and appreciate as a nation.
We need everyone to know what actually just happened.
The Medicare program has been saved.
We could save the country and make care far better if we decided to stand back and look at the possibilities. We should recognize what we could do if we decided to do it, and we should make it happen. Let’s use the MA payment model to steer us down the right road in intentional and well-structured ways. It is the right thing to do.
George Halvorson is Chair and CEO of the Institute for InterGroup Understanding and was CEO of Kaiser Permanente from 2002-14.