By GEORGE HALVORSON

Medicare Advantage is better for the underserved

The African American and Hispanic communities who were particularly hard hit by those conditions and by the Covid death rates have been enrolling in significant numbers in Medicare Advantage plans.

The sets of people who were most damaged by Covid have chosen in disproportional numbers to be Medicare Advantage members. Currently 51 percent of the African Americans on Medicare are in Medicare Advantage plans and more than 60 percent of the Hispanic Medicare members will be on Medicare Advantage this year.

That disproportionate enrollment in Medicare Advantage surprises some people, but it really should not surprise anyone because the Plans have made special,  direct, and inclusive efforts to be attractive to people with those sets of care needs and have delivered better care and service than many of the new enrollees have ever had in their lives. 

The Medicare Advantage plans have language proficiency support competencies, and language requirements and capabilities that clearly do not exist anywhere for fee-for-service Medicare care sites. A combination of team care,  language proficiency, and significantly lower direct health care costs for each member has encouraged that pattern of enrollment as well.

The $1600 savings per person has been a highly relevant factor as more than twice as many of the lowest income Medicare members — people who make less than $30,000 a year — are now enrolled in Medicare Advantage plans.

Medicare Advantage’s critics tend to explicitly avoid discussing those enrollment patterns, and some of the most basic critics actually shamelessly say, with what must be at least unconscious malicious intent in various publications and settings, that the Medicare Advantage demographics for both ethnicity and income levels are a clone for standard Medicare membership. Those critics have said that  there is nothing for us to learn or see from any enrollment patterns or care practices based on those sets of issues.

Many people who discuss Medicare Advantage in media and policy settings generally do not focus on or even mention the people in our population who most need Medicare Advantage — the 4 million people who are now enrolled in the Special Needs Plans.

Special Needs Plans for Dual Eligibles

The Special Needs Plans take care of low-income people who have problematic levels of care needs and who very much need better care.

 Some negative and badly misinformed critics of Medicare Advantage sometimes say and even write that the primary business model of the plans is to somehow manipulate their risk pool level data to improve and inflate their capitation levels and those critics sometimes also very directly say that it is the business model of the plans to avoid having any impact on care.

That set of beliefs and statements is so extremely wrong that it is actually painfully and almost criminally wrong. The Special Needs Plans for Medicare Advantage prove that to be wrong beyond any shadow of a doubt.

Four million Medicare Advantage Special Needs Plan members have income levels that are low enough and they have care need levels that are high enough for them to qualify for Medicaid coverage as well as for Medicare coverage — and millions of those dual eligible low-income patients who have joined Medicare Advantage plans are now personally each getting better care than a huge proportion of those patients have ever received in their lives.

The special needs plans are almost an extension of social service support in their communities for those patients. The plans have nurses and other caregivers going into people’s homes to assess and determine care needs and to deliver care in the context of those patient specific needs.

That set of focused services for those patients is a very special and very much needed thing for us as a country to do — and many of the people in the special-needs plans are literally getting the best care of their life now from the Medicare Advantage plans.

That can’t even be debated if you look at the care that has been the normal level of care for those patients in too many of those settings. Those Medicare Advantage members are getting best levels of care now because the actual care that a high percentage of those patients received before enrollment happened when the negative social determinants of health factors were defining and creating their actual care settings in their communities.

That was too often not good care and it was very much less effective in doing what those groups of people need done at this point in their lives.

The first line of this piece says that Medicare Advantage is a clearly superior program and it says that we should be steering people into Medicare Advantage plans for the good of Medicare and for the good of each person who goes down that path. That recommendation and proposal is absolutely reinforced, affirmed, and confirmed by what the Special Needs Plans do for the 4 million high need and low-income people they serve.

The whole payment process for Medicare Advantage is anchored on Capitation. Capitation allows the caregivers to use the money more wisely to deliver better care.

The Medicare Advantage plans do make a profit — and that profit is under 5%. The plans have an average profit of 4.5%. That’s the lowest profit level of any major industry and it is less than half of the profit made by the average business in America. The Affordable Care act has very strict rules and limits on profits — so that profit number isn’t ever going to get to any of the fake news profit levels that some of the less honest of the political opponents of the Medicare Advantage plans sometimes pretend exist as profits for the plans now.

The profits are low and the cash flow is entirely controlled by the payment model. As a buyer, Medicare pays Medicare Advantage plans a capitation for each member for each month.

Managing the Future of Capitation in Medicare Advantage

The beauty of capitation is that you can set it using the best data and using the best actuarial judgment that you can use to get to the right number and then that capitation number is the total cost of care for those people. Nothing can be done to change the cost of care for Medicare for those people once the capitation is set.

If the number is wrong, fix the number.

Every other aspect of the health care economy and health care cash flow has a million moving parts that are all hard to steer, direct and control — and the cost of Medicare Advantage is set with just one annual number when the capitation level for the year is determined.

The number needs to be built each year by good data and solid actuarial skills at the number that works best to keep care improving, to keep people covered and insured, and to give the care sites both enough money to deliver the program and to both control costs and continuously improve care.

There have been some concerns in some settings on some years on the capitation setting process. We should fix that concern.

We need a number that people trust. We need a number with fully credible linkages to the patient medical records so that the data in the process reflects the actual status of the patients.

We need a continuously improving process — and we need a process that is stable enough to allow the care infrastructure of this country to invest in itself and build better pieces at every level to continuously improve care with the knowledge that future zigs and zags in the cash flow will not undermine solid investments made in future care.

We could make care far better in this country if we use the full tool kit for need discernment, optimal biological science, direct patient electronic support tools and information, and continuously improving care. To achieve those goals, we need to use capitation to buy care everywhere by the package and not by the piece.

Capitation buys care by the package, and it is absolutely the total amount that the buyer spends on care.

The actual reality is that a dollar spent on Medicare Advantage today moves us in that direction, because it is a capitation program, and we get to set the capitation every year.

The Medicare Advantage approach already gives people with high care needs better care and that dollar spent on Medicare Advantage also keeps the total cost of care down for both members and for the government by where we set the capitation.

That annual pricing process also gives us an extremely useful framework that we should now make a top priority of doing well every year to tee up our expectations for the future and to steer the future in the directions we want it to go– using the Medicare Advantage cash flow to steer us as an infrastructure of care in some very good directions in very intentional ways.

Those negotiations and the Five Star Plan quality requirements are actually the best tools that we have to steer the direction of care in this country at this point in time.  We should all understand what those opportunities for steerage actually are today with Medicare Advantage as a program.

We can actually manage future care expectations though the Medicare Advantage Five-Star Quality plan annual negotiations and enhancement process.

The five-star plan should probably be enhanced this year or next to reflect what we have learned about Covid and pandemics and about electronically connected care and algorithms for care, and we should decide at some point this year if we want to make some changes in that space and in those expectations.

It we ever wanted to improve something in standard fee-for-service Medicare, that could be incredibly hard to do. With Medicare Advantage, however, we can simply set the specifications up each year in key areas and then we can steer in that direction because that opportunity exists, and it is a purchase and not a payment.

We should have major public awareness both of the five-star plan results and of any modifications we want to make for the future, because our expectations written into that process actually guides care in very effective ways and we can use it to steer care for everyone if we use that process well.

We need the capitation data each year to be based on data fed by the medical records — and we should figure out what levels of care we want to enhance based on the best science available for care. We should set up an expectation of care sites doing continuous improvement and we should steer that process to optimal care. We spend too much money not to get great care.

And we need to support the programs we have in place now — with the Special Needs Plans getting the special treatment they deserve.

And we should make joining plans even easier to have more people benefiting from the best practices that exist in so many places.

Medicare Advantage will Save the Trust Fund

Medicare Advantage truly is a superior program at so many levels, and we should understand the fact that we could actually build on that superiority to help Medicare survive and thrive as the best government health care program for people in the world and we could, if we want, actually set the future capitation levels at the level where the Medicare Trust fund is saved.

One estimate from a credible source said that a 3 percent lowering of the currently expected capitation level increase from the current overall cost trend for Medicare would save Medicare financially. We should confirm those numbers, but if that is true, it could easily be done.

It could easily be done because there is so much low hanging fruit in the delivery of health care that we could harvest relatively easily if we decided to go down that path.

There are such huge opportunities that exist in making care better using all of the new tools for care that the 3 percent lower-cost trend number could be a walk in the park if we steer the process well and decide to do it as a nation. For now, let’s optimize what we have and celebrate all of the things that deserve celebration, and let’s have the politicized Medicare Advantage critics take their hands off the quality program and completely off the special needs programs.

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