Zero-premium MA plans are attracting disadvantaged populations

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Zero-premium Medicare Advantage plans are attracting a substantially more socioeconomically disadvantaged population compared to non-zero premium MA plans and traditional Medicare fee-for-service. Also, Health Maintenance Organization plans have significantly lower utilization than Preferred Provider Organization and FFS plans, finds a new white paper from Inovalon and Harvard Medical School.

Demographic and socioeconomic characteristics differ significantly for enrollees in zero-premium MA plans compared to higher-premium options. Enrollees in zero-premium plans are three times as likely to be nonwhite and are more likely to live in urban areas than other MA and FFS enrollees, for instance.

Zero-premium MA enrollees have a net worth of 90% of the net worth of other MA enrollees and only 70% of FFS enrollees, the numbers showed. And compared to those in other MA or FFS plans, zero-premium enrollees are more likely to have a high school education or less, less likely to own their own home or vehicle, less likely to be married, and more likely to have difficulty speaking English.

Enrollees in MA HMO plans are more socioeconomically disadvantaged and experience lower healthcare utilization than MA PPO enrollees. MA HMO enrollees are three times more likely to be nonwhite than those in MA PPO plans. Utilization under MA HMOs is 29% lower, relative to a comparable population in MA PPOs, equating to a $2,460 lower utilization per person annually.

WHAT'S THE IMPACT?

Previous research from Inovalon and Harvard Medical School found that MA delivers superior quality outcomes and utilization reductions compared to FFS Medicare, even after controlling for differences in who enrolls. But previously there was limited data on the differences within MA, and how specific MA plan designs and features impact outcomes.

Limited data prevented previous studies from analyzing how different plan types and features, such as out-of-pocket costs and coverage design, impact enrollment decisions and outcomes, authors said.

The study used the nation's largest longitudinal primary source healthcare dataset, Inovalon's MORE2 Registry, which covers 100% of public Medicare lives and 30% of all privately insured lives.

"Our analysis can help Medicare Advantage and other health plans more effectively serve their member populations by offering tailored designs and features," said Dr. Christie Teigland, vice president of research science and advanced analytics at Inovalon and co-lead researcher on the project. "With these insights health plans can project expected enrollment, evaluate the performance of their features against industry benchmarks, and identify opportunities to address health disparities and deliver optimal outcomes."

THE LARGER TREND

Despite strong enrollment gains, market growth for Medicare Advantage seems to be slowing, according to the 2024 Medicare Advantage competitive enrollment report released last month by Chartis and HealthScape Advisors.

The Medicare Advantage market grew by 1.7 million beneficiaries (5.4%) in 2023, slowing down from the record growth of 2.7 million (9.4%) in 2022, the report found. This ongoing enrollment growth is fueled by an increasing senior market, but is overshadowed by regulatory pressures, declining quality scores and rising medical costs.

Moody's Investor Service recently found that, while Medicare Advantage remains attractive to the healthcare industry due to strong growth, high revenue and earnings per member, profitability is on the decline.

In the coming year, more than half of Medicare's 66 million beneficiaries may opt for private Medicare Advantage plans, a development likely to put further strain on an already overstretched healthcare system, according to a recent report in The New England Journal of Medicine.

Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.