Higher Medicare Advantage premiums not linked to better quality, says RAND
Rather than looking at MA premium prices alone, seniors should consider other factors, such as Star Ratings, a new report finds.
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Seniors who pick Medicare Advantage plans with higher premiums don't necessarily receive better-quality healthcare, according to new findings from RAND.
Published in the Journal of the American Medical Association, the study said that rather than looking at MA premium prices alone, seniors should consider other factors, such as Star Ratings, which are a reflection of care quality.
In an analysis of hundreds of Medicare Advantage plans, RAND found about 40% of enrollees were in a plan with no premium, while 6% were in plans that had monthly premiums exceeding $120.
There was little difference in patient experience scores based on the various premiums. A plan with a monthly premium between $60 and $120 saw a 1.4% increase in patient experience scores over a no-premium plan, but plans that cost more than $120 monthly only had a 2.2% increase.
That's not to say that high-premium plans had no benefits. People enrolled in such plans were more likely to receive annual flu shots. But care was actually better for some conditions, including osteoporosis, in lower-premium plans.
WHAT'S THE IMPACT?
MA plans now comprise nearly half of total Medicare enrollment,
Consumers' perceptions of price and quality are particularly important when choosing health insurance, RAND found. Reliable and comparable quality indicators are often lacking, and some consumers are skeptical of plans' quality ratings, given the complexity of the calculations.
Conversely, insurance plan prices are often standardized to facilitate price comparison, unlike prices in medical settings. So price, rather than quality, may dominate plan selection decisions.
Medicare Advantage is a potentially informative setting for comparing plan pricing and quality. Unlike fee-for-service Medicare coverage, MA prices and quality are monitored and publicly reported by the Centers for Medicare and Medicaid Services.
Plan prices have several components, including deductibles, subsidies and a maximum out-of-pocket expense. Most Medicare Advantage enrollees who participated in focus groups reported that they mainly consider the prices of premiums and out-of-pocket expenses and do not consider information on the quality of plans. These focus group findings are supported by empirical research that found that premiums explained enrollment twice as strongly as quality ratings.
The mechanism linking monthly premium and plan quality is unknown, the report found. In the employer-sponsored insurance market and on the individual exchanges, higher monthly premiums are associated with lower out-of-pocket costs at the point-of-care – lower deductibles and copays or coinsurance. Plus, low premium plans may have narrow networks that may restrict patient choice and access.
In Medicare Advantage, these relationships are altered by the Quality Bonus Program, whereby the MA plans with the highest past performance receive bonus payments to either provide additional enrollee benefits, such as dental and vision coverage, or to lower the monthly premiums. If bonuses were to be used by high-quality plans to discount premiums, the associations between premium pricing and plan quality may weaken.
THE LARGER TREND
As enrollment in the Medicare Advantage program grows, so do concerns and uncertainty over the profits providers are reaping and whether "overpayment" is an issue. A report from the Brookings Institution indicates the five major insurers – UnitedHealthcare, Humana, Aetna, Kaiser Permanente and Elevance Health (formerly Anthem) – are padding their bottom lines by disguising profits as costs.
The report points out that insurers are able to do this because profits accrued through related businesses are not regulated by medical loss ratio requirements.
Still, insurers are expanding their Medicare Advantage offerings at a decent clip, with Clover Health becoming the latest insurer to expand its MA footprint. It will push into 13 new counties across three states in 2023: Georgia, South Carolina and Tennessee.
Subject to approval from the Centers for Medicare and Medicaid Services, those eligible for Medicare in these new counties will be able to sign up for Clover's MA plans during the MA Annual Enrollment Period, which runs from October 15 to December 7, with coverage starting on January 1, 2023.
Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com
