Onset of disability spurs exit from private Medicare Advantage plans

By Claire K. Ankuda, Katherine A. Ornstein, Kenneth E. Covinsky, Evan Bollens-Lund, Diane E. Meier, and Amy S. Kelley
Health Affairs, May 2020

Abstract

Medicare Advantage (MA) plans have increasing flexibility to provide nonmedical services to support older adults aging in place in the community. However, prior research has suggested that enrollees with functional disability (hereafter, “disability”) were more likely than those without disability to leave MA plans. This indicates that MA plans might not meet the needs of older adults with disability. We used data for 2011–16 from the National Health and Aging Trends Study linked to Medicare claims to measure and characterize switches in either direction between Medicare Advantage and traditional Medicare in the twelve months before and after onset of disability. While the rate of switches from Medicare Advantage to traditional Medicare increased slightly after disability onset, people with greater levels of disability were more likely to switch to traditional Medicare, compared to those with lower levels: 36 percent of those who switched from Medicare Advantage to traditional Medicare needed help with two or more activities of daily living, compared to 14.3 percent of those who switched from traditional Medicare to Medicare Advantage. This indicates the potential benefit of including functional measures in MA plan risk adjustment and quality measures. Furthermore, the highest-need older adults with disability may experience lower-quality care in Medicare Advantage and thus leave before accessing the program’s expanded benefits.

From the Introduction

While MA plans are required to cover all services covered by traditional Medicare (with the exception of hospice, which is carved out of MA plans), there are several reasons why older adults may be more likely to switch from Medicare Advantage to traditional Medicare after becoming disabled. To control costs for postacute care often needed by older adults with disability, MA plans may limit networks of skilled nursing facilities, pressure the facilities to shorten beneficiary lengths-of-stay, and employ burdensome prior authorization procedures. Limited provider networks may affect the quality of care and satisfaction of MA beneficiaries, as older adults in Medicare Advantage are more likely than those in traditional Medicare to be served by skilled nursing facilities and home health agencies with lower quality ratings. Limited networks and less flexible options may especially challenge people with disability, who often rely on caregivers. The additional coordination needed to find in-network, accessible providers in MA plans may be a barrier. This raises the concern that participation in Medicare Advantage poses unique barriers to care for older adults with disability. This is especially worrisome given that this population is highly vulnerable, with high levels of health needs and risk of significant morbidity and mortality—especially if their needs are not met.

From the Discussion

This nationally representative study of adults ages sixty-five and older demonstrated that people are more likely to switch from Medicare Advantage to traditional Medicare following the onset of disability than from traditional Medicare to Medicare Advantage, and that the characteristics of people who switch from Medicare Advantage to traditional Medicare are different from those of people switching from traditional Medicare to Medicare Advantage. While other studies have demonstrated that high-need older adults are more likely to switch from Medicare Advantage to traditional Medicare than the reverse, this is the first study to show the temporal relationship between onset of disability and disenrollment from Medicare Advantage. Furthermore, older adults who are of nonwhite race or from high-risk socioeconomic groups are more likely to switch insurance coverage than are those of white race and with higher incomes and education levels, while those who are more severely disabled are more likely to prefer traditional Medicare. These findings have important implications for measuring quality, appropriately risk-adjusting payments, and reducing disparities within the MA program.

In 2017 the Government Accountability Office conducted an assessment of MA plans with high levels of beneficiaries’ switching to traditional Medicare, using claims to estimate the health status of individuals who switched plans. Consistent with our results, the assessment found significant levels of health bias, or higher rates of disenrollment by individuals in poor health.

https://www.healthaffairs.org…

Comment:

By Don McCanne, M.D.

Even though Congress and both Republican and Democratic administrations have continued to advance policies favoring the private Medicare Advantage plans while neglecting the traditional Medicare program, the private insurance industry continues to demonstrate what a bad deal the taxpayers are receiving from their plans (though acknowledging that healthier beneficiaries are often satisfied with their care).

This study shows that people who develop functional disabilities tend to disenroll from the private Medicare Advantage plans and move into the traditional Medicare program. This is particularly true of nonwhite individuals from high-risk socioeconomic groups who were in poorer health, including those with more severe disabilities.

As our politicians continue in their efforts to privatize Medicare, it is working superbly well for the Wall Street investors who are choosing insurance stocks, but privatization is not serving well Medicare beneficiaries who have the greatest health care needs. Instead, our politicians should improve the traditional Medicare program, while eliminating the private sector that has brought us higher costs and lower quality (the opposite of what they promised). Then we should expand Medicare to cover everyone through an efficient, effective and more equitable single payer model of Medicare for All. The sooner the better.

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