Thursday, March 08, 2018

Can Medicare Advantage plans lower enrollees' out-of-pocket costs? A talk with Kaiser's Juliette Cubanski

A month ago, I took a look at the resources available -- or unavailable -- to Medicaid enrollees who face a "Medicare cliff" when they turn 65 -- that is, a transition from having basically all their medical expenses covered to a program that carries a monthly premium for most of $134, requires 20% copays for most medical services and potentially huge outlays for inpatient hospital care, and has no cap on out-of-pocket costs.

Some 10.7 million Medicare enrollees are "dual eligibles" of one kind or another -- enrolled either in ABD (Aged/Blind/Disabled) Medicaid, which provides comprehensive coverage,  or in Medicare Savings Programs (MSPs), which offer more partial coverage, or in some cases both.  But the income thresholds for all of these programs are lower than for Medicaid in states that accepted the ACA expansion, and the asset tests for the MSPs are quite low -- $7560 for an individual, excluding home and car.  The application process is complex, and help and outreach are underfunded.  (For a useful overview, see Josh Schultz.)

For the many seniors of quite limited means who don't qualify for MSPs, I wondered to what extent Medicare Advantage (MA) plans might function as a de facto discount plan. About one third of current Medicare enrollees are in MA plans. MA plans usually incorporate a Part D drug plan, and often the premium is lower than the combined premium for Medicare Parts B and D (e.g., in zero-premium plans, in which enrollees pay only their Medicare Part B premium).  MA plans may offer extra benefits, such as dental, vision or hearing coverage (often quite limited). Perhaps most importantly, they cap out-of-pocket costs at a maximum of $6,700 per year. The main tradeoff is acceptance of a limited provider network -- often quite limited.

I spoke to Juliette Cubanski, Associate Director of the Program on Medicare Policy at the Kaiser Family Foundation and lead author of a recent Kaiser report on healthcare spending in Medicare households, about the appeal, real or perceived, of Medicare Advantage plans for lower income Medicare enrollees.  An edited q-and-a is below.

xpostfactoid: Does Medicare Advantage often offer effective de facto discounts over traditional Medicare?

Cubanski:"We don't know what out-of-pocket spending looks like for people in MA because the data we have are not reliable. Our gold standard for analyzing out-of-pocket costs in Medicare is the Medicare Current Beneficiary Survey. It encompasses both traditional Medicare and Medicare Advantage, but for people in traditional Medicare survey administrators have the advantage of having claims data. Beneficiaries report their spending, but in cases where people forget [some incidents], survey administrators can look in the claims data and pull services for those people that they didn't report. They can't do that for people in Medicare Advantage because they don't have that same set of claims data [the data is reported to CMS, but there are questions about its reliability]. So while people in MA report lower out-of-pocket spending, we don't know if that's a true result, or if that's a sort of artifact of this inadequacy in the survey data

It's frustrating because it's a really important question. If you listen to what the MA advocacy groups say -- MA plans serve low income people, they lower out-of-pocket costs and deliver higher quality care -- to my knowledge there's really no way to prove any of those statements are true.

One other thing I would say: MA beneficiaries may be healthier. And if they are, and they use fewer services, you'd expect lower out-of-pocket spending.

xpost: Understanding there's a lot of regional variation, in general, are people going to be likely to find an MA plan where the copays are less than in traditional Medicare?

Cubanski: There's a lot of variation in charges by region -- a doctor visit in one area is going to be a lot more than in another, so the 20% charge in traditional Medicare is going to be a lot less in some areas than in others. A value in MA in some beneficiaries' minds may be a known copayment, as opposed to a 20% charge [in traditional Medicare] where you don't know what that 20% is going to translate to.

You can go to Medicare's plan-finder and look at the MA plans in your area and compare from one plan to another -- 'if I go to the doctor it's going to cost $20 in this plan vs. $25 in that.' It's usually a more straightforward calculation because it's a flat dollar amount. I think that has appeal for people because it makes it easier to know what you're going to pay when you're walking out the door.  Whether  those costs are lower than the amounts that people in traditional Medicare pay -- it's really hard to make that comparison.

The bigger questions for most people are likely to be: Are my doctors in-network? And what's the monthly premium?  People pay less attention to the fine print. At the same time, the out-of-pocket limit [$6,700 per person per year, or less in many plans] for people with really high medical costs is a really appealing feature of Medicare Advantage.

But it's a really hard calculation, because people in traditional Medicare can purchase a Medigap policy, which will pay for all of their medical costs. So their out-of-pocket costs would essentially be just the Medigap premium.

xpost: What extra value offered by some MA plans is likeliest to attract low income enrollees? Dental/vision/hearing, maybe?

Cubanski:  MA plans are really all over the map when it comes to the scope of these benefits. People may be attracted to them, but they need to understand the scope of the coverage they're getting. It could be very limited -- limited to a specific dollar amount, or two cleanings or something like that.

xpost: Kaiser recently released a report finding that 35% of MA plans have narrow networks, defined as those that include less than 30% of the physicians in the county, and that another 43% have "medium" networks, including 30-69% of physicians in the county. Traditional Medicare offers virtually unlimited access to physicians. Isn't that a lot to give up? What's the chief value proposition for low income people?

Cubanski: It's hard to say, since it's such an individual choice, but MA looks a lot like what people have before they turn 65 -- that is, like the plans people may know from their private commercial coverage that they had when they were working . United, Cigna, Humana, Aetna -- it's these big names that are participating in MA, and so it's more familiar to people now than it may have been a decade ago.  It's kind of a one-stop-shopping situation where, yes, you're limited to doctors in that network. But people may be accustomed that outside of Medicare...for some people, it might not seem like that much of a problem.

But in some cases, you don't realize that you're in a narrow network plan until you bump up against the problem of not being able to see the doctor you want to see. If you aren't seeing that many doctors and you have some flexibility in who you seek care from, maybe it's not  so much of a problem -- until you need to find that one specialist or want to see that one specialist who doesn't take your plan and then you bump up against the problem of being in a limited network like MA plans are.

*          *          *

The conversation highlights two difficulties in assessing any value added by the Medicare Advantage alternative. First is the data problem: an apples-to-apples comparison of out-of-pocket costs for comparable enrollees is not possible at present, because the claims data submitted by MA plans is not deemed reliable enough by MCBS administrators to cross-check survey respondents' self-reporting, as they do with traditional Medicare. Second, the sheer number of variables in MA plan designs requires a very complex calculation from enrollees --  rendered still more complex, for those with at least some income to spare, by no fewer than ten species of Medigap policies. On the other hand, the star rating system for MA plans may simplify the selection process for some.

Our conversation did not address the huge question of whether active management in MA plans increases the quality of care and reduces unneeded care, nor the question of whether the MA program saves taxpayers' money. Austin Frakt's frequent overviews of MA research, themselves overviewed here,  indicate that the answer to the first question is yes, and to the second, uncertain. Would it be possible to capture the program's benefits while simplifying the choice facing enrollees?

Update, 3/10/18: A useful article mapping out the scope of key supplemental benefit offerings in MA, with a slight whiff of advocacy, is Supplemental Benefits Under Medicare Advantage, by Christopher Pope (of Health West), in Health Affairs. 1/21/16, The key takeaways, for me: 1) more than half of MA enrollees are in zero-premium plans; 2) In the one state spotlighted, Massachusetts, more than half of plans offer some level/combination of dental/hearing/vision benefits; 3) those benefits are often quite limited, as Juliette Cubanski suggests above; and 4) the OOP limit is perhaps the most crucial benefit, and 56% of MA enrollees are in plans with MOOP below $5,000. And, to perhaps put the first last, the author's thesis makes an important point: The bulk of supplemental benefits under MA are features of greater value to the sick than to the healthy

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