Medicare Advantage Is a Superior Program (Part one)

By GEORGE HALVORSON

Former Kaiser Permanente CEO George Halvorson has written on THCB on and off over the years, most notably with his proposal for Medicare Advantage for All post-COVID. He wrote a piece in Health Affairs last week arguing with the stance of Medicare Advantage of Don Berwick and Rick Gilfillan (Here’s their piece pt1, pt2). Here’s a longer exposition of his argument. We are publishing part one today with part two coming soon – Matthew Holt

The evidence for Medicare Advantage being a superior program compared to standard fee-for-service Medicare is so overwhelming that anyone who cares about actual Medicare Patients or who cares about the financial future of Medicare should be strongly supporting having as many people as possible enrolled in that program as soon as we can effectively make that happen.

Compared to fee-for-service Medicare, Medicare Advantage has better benefits.

Compared to fee-for-service Medicare, Medicare Advantage has a better tool kit at multiple levels.

Medicare Advantage has team care, connected care, and electronically supported care processes — and we know beyond any debate or dispute that those advantages exist for Medicare Advantage over standard fee-for-service Medicare because fee-for-service Medicare does not pay for those sets of services and literally labels it billing fraud if a caregiver who provides team care in a patients home to prevent a congestive heart failure crisis or to keep a life threatening and function impairing asthma attack from happening sends a bill to standard Medicare for those services.

The superiority of Medicare Advantage is beyond question.

Standard fee-for-service Medicare has no quality care processes, no quality reports and no quality standards or expectations at all. Standard Medicare actually has absolutely no quality data and does not hold any provider accountable for the quality of the care they deliver.

Medicare Advantage has an extensive quality agenda and tracks more than 40 categories of quality and service at the plan level. Medicare Advantage plans build continuously improving programs around those Five-Star priorities and measures, and we know from our current reporting that even during Covid, the percentage of Medicare Advantage patients with cardiovascular disease who are currently on statin therapy went up from 80.86% of patients a year ago to 83.36% this year.

The ratings by the Medicare Advantage members for customer service by their plans went from 90.56% a year ago to 90.87% this year.

That is not a big improvement but having satisfaction numbers that start out that high actually go up during Covid days is an accomplishment and it is one of the reasons why we should be encouraging people to join the plans and its why fee-for-service Medicare is a measurably inferior approach for so many people.

Standard Medicare does not have a clue about who is getting their statin Medications and they officially don’t care.

In fact, some of the fee-for-service Medicare doctors and care sites who are paid only by the piece for care from the standard Medicare program actually often make more money when care fails, because when a patient has a major asthma crisis or a congestive heart failure crisis, that negative outcome for a patient can generate multiple medical fees and it can too often trigger a $10,000–$20,000 total additional cash flow to the caregivers whose care sites failed that patient by not helping improve the health of the patient before the crisis was triggered.

Why is Medicare Advantage’s purchasing system better?

Medicare Advantage plans are paid by Medicare by the month for each patient and they are not by the piece for each item of care.

Because Medicare Advantage plans are paid by the month for each patient, and must, by contract, provide complete care to each patient, it makes extremely good sense for the plans to help patients in ways that prevent asthma attacks and that prevent congestive heart failure crisis, and that avoid and help reduce the levels of blindness and amputations for their diabetic patients that can too easily happen to those patients if you don’t manage and guide that care.

The Medicare Advantage approach for all of those categories of care is obviously far better for the patients than the fee-for-service Medicare inadequacies in care.

Congestive heart failure patients often suffer a lot of pain. Those sometimes-terrifying CHF crisis can kill patients and they also do increasing levels of permanent and crippling damage to the survivors. Medicare Advantage plans all work hard to identify which patients are at risk and to interact with each of the patients to lower the risk.

Medicare Advantage plans use their monthly capitation payment to create team care and to build care teams and they know that it costs a lot less to do care right than it costs to do it wrong.

Because they do care right for more patients, the Medicare Advantage plans have more than a 30 percent lower level of emergency room visits and they have more than a 40 percent lower level of in-patient hospital care compared to fee-for-service Medicare patients.

The plans use the money they save by making care better to improve benefits, and to enhance the scope of their care. The plans tie closely to prescription drug programs, and most members who chose plans with drug coverage links have significantly better care as a result of those relationships as well.

Traditional fee-for-service medicine benefit levels are incomplete, and they are undeniably flawed. When the government spends a dollar on fee-for-service Medicare, they buy an incomplete benefit package and they buy an incomplete delivery system that costs their beneficiaries of that program a lot of money.

The Advantage for Beneficiaries

The average fee-for-service Medicare beneficiary currently has an average out of pocket cost each year of over $5,000. The fee-for-service beneficiaries who do not buy some kind of supplemental plan to offset the deficiencies in that fee-for-service Medicare payment approach have even more expenses. Those fee-for-service Medicare enrollees currently now have more than $7,000 in out of pocket costs.

The traditional Medicare program is very popular with many people because it is available to every eligible person who needs it with no questions asked — and that availability for every person is a very good thing.

However. It is not a very good thing to have absolutely no lifetime limit on the total health care costs for each fee-for-service Medicare beneficiary and it is not a good thing to have an average set of costs that now exceeds $5000 a year, in direct response to the fact that the fee-for-service benefit package and the fee-for-service care delivery approach have so many holes in them. By contrast, when someone enrolls in a Medicare Advantage plan and the government pays their dollar down that pathway, the benefits are more complete and they are focused on patient-based team care rather than on unconnected and uncoordinated fee-based provider sites maximizing their opportunities to bill for pieces of care.

People enrolled in those plans actually now spend about $1600 less each year for care than the costs incurred by people with fee-for-service Medicare coverage. That’s up from saving an average of $1400 for each Medicare Advantage patient a year ago.

That direct level of savings for each Medicare Advantage member is a significant amount of money that most people do not know exists. It’s very real money for Medicare Advantage members. 

So a dollar spent by Medicare on Medicare Advantage both purchases a better set of benefits, that can include vision care, hearing care, and dental care among other services that don’t exist in fee-for-service Medicare — and it creates a savings of $1,600 in personal costs for each Medicare Advantage member.

What are the policy critics missing?

Some health care policy purists and some hardcore Medicare Advantage critics object to that expanded use of the Medicare dollar to expand benefits for members and some are also unhappy with the fact that Medicare Advantage patients save that much money.

They think that saving that much money for each member gives Medicare Advantage plans what they call an unfair advantage in the annual enrollment process.

A significantly large number of health policy people in settings like MedPac carefully avoid mentioning, discussing or even considering those additional benefits and those direct member savings because, they say, those benefits in Medicare Advantage happen for individual people. Some policy people do not agree or believe that benefits for individual people and for individual Medicare beneficiaries either should happen or should be considered and discussed in weighing and comparing the two programs because the personal savings don’t affect the total Medicare Trust fund economic status and they steer people into becoming Medicare Advantage enrollees.

The total amount of money spent on Medicare Advantage per enrollee is set up every year to be less than the amount spent on fee for service Medicare enrollees. The plans are so much more effective in the delivery of care than traditional Medicare that, even though the plans bid every year at numbers that are lower than the average cost of care for each area, they end up making a surplus on the capitation they are paid. 

They are required by law to share that surplus with their members—and that’s one of the reasons why the plans have benefits that are so much richer than the traditional fee for service Medicare benefits every year.

That good use of the Medicare dollar should be celebrated—some Medicare Advantage critics would prefer that it not happen for anyone.

The continued insistence by some policy people that Medicare remain primarily be a payer and not a buyer is unfortunate because, as a pure payer, Medicare currently gets less for the “payment”-based Medicare dollar and it spends a lot of those dollars in less than optimal ways.

As a buyer, when that money is paid to Medicare Advantage plans, Medicare clearly gets much better benefits, services, and extended levels of care for that same dollar. The beneficiaries who are enrolled in the plans benefit and the total cost to Medicare is actually always going to end up being lower because CMS can set the capitation at a level to make that happen.

Real people in the Medicare Advantage program benefit today in very real ways and that literally happens because Medicare Advantage is a purchaser and actually delivers care as a package–not just as an uncoordinated and continuously growing avalanche of payments that are made purely as direct payments to unconnected care sites and unlinked caregivers.

The Covid experience of the past two years showed clearly how different the two approaches are. 

People in fee-for-service Medicare were too often isolated and trapped in their non systems with no dependable place to go for care when Covid screwed up the care delivery infrastructure so quickly and badly. That forced every one of those fee-for-service beneficiaries to fend for themselves to find care. By contrast, people with Medicare Advantage plans had care sites, care teams, care coordination, and early and medically grounded responses to the Covid issues in organized and patient focused ways.

The life experiences for Medicare Advantage plan members and the life experiences during those same times for the unconnected care sites of fee for service Medicare were two very different life paths for millions of people and we need to recognize how different those paths were.

What should Medpac do?

MedPac should do a major analysis of the difference in responses to Covid that happened for patients with Medicare Advantage coverage, and they should look at what happened for people who only had fee-for-service Medicare coverage.

The temptation for the MedPac discussions will be to follow their past practice and not look at any of the value or the functionality that is actually created by being in a Medicare Advantage plan in their deliberations and discussions. MedPac is well intended, but it tends to look only at economic issues and it tends to avoid adding any human experience considerations into their thinking or discussions. We should encourage MedPac, as stewards for the entire Medicare experience, to look closely at that entire set of care delivery issues at this moment in time.

MedPac should look at Covid and should discuss what we learned from Covid about those two approaches to coverage and care. The MedPac team should also think about the Social Determinants of Health realities in that same context.

Social determinants of health need to be on the table for us as a country and on the table in the context of our Medicare programs as well because Covid has made some of the issues even more visible than they were before the pandemic hit.

There is a growing awareness in health care policy circles that many people in our communities and country have been damaged in a number of ways by Social Determinants of Health factors and issues. People from various settings and groups have been damaged by inadequate, insufficient and incomplete care for very long periods of time and too many people in those settings suffer now from having chronic conditions that make Covid more deadly at very basic levels. 

We need people who have been historically damages to have  better care that can give those patients better outcomes, better treatments,  and, in very real ways,  better lives.

Covid gave us a major wake-up call as a country

When Covid hit, we saw death rates that were more than double for both our Hispanic and our African American patients. When we drilled down into the death rates, we saw that the people who were dying in such disproportionate numbers in all of those settings from each of those groups were people with multiple chronic conditions — and they were far too often people who had no plans or care programs in place to deal with those issues and those conditions in any effective way.

Medicare Advantage is dealing directly with those sets of issues.

Medicare Advantage plans were among the first care sites to put Covid testing in place and the Medicare Advantage plans have led the way on multiple aspects of Covid-related care improvement. A number of plans have led the way on best practices for care for their most senior patients because that what the plans are set up to do and because that information sharing is enabled by the structure and processes set up by the plans.

It was better for people to be Medicare Advantage members during those time frames.

It was clearly not easy being a fee for service Medicare beneficiary when Covid hit.

Being alone in your home as a fee-for-service Medicare enrollee in the first months and the first year of Covid had to be much more problematic, challenging, and even terrifying for far too many people with fee-for-service Medicare coverage in comparison to the Medicare Advantage enrollees who had their Medicare Advantage plans and care networks already in place. Their support systems, infrastructure, care guidance support, contact people, and functional medical friends,  existed because of actual processes in place from Medicare Advantage plans.

(Part 2 coming soon)

George Halvorson is Chair and CEO of the Institute for InterGroup Understanding and was CEO of Kaiser Permanente from 2002-14