Advantage: Medicare Advantage

I’ve always liked the idea of a geriatric managed care organization. I liked it back when they were called Medicare HMOs (after they were first introduced in 1972 via an amendment to Social Security); I liked the idea when Medicare HMOs got a new lease on life from the Tax, Equity, and Fiscal Responsibility Act of 1982 (TEFRA, which launched a number of demonstration projects); I liked it when Medicare HMOs were reincarnated as Medicare+Choice programs after passage of the Balanced Budget Act of 1997; and I liked the idea when the program was renamed Medicare Advantage in 2003. It made sense because it encouraged coordination of care by making a single organization responsible for outpatient, hospital, and post-acute care; it made sense because it could offer benefits important to older people such as glasses and, in the pre-Medicare Modernization Act era, prescription drugs. But it’s never had a wide following. Recently, that trend may be changing.

A new report from the Henry J. Kaiser Family Foundation, “Medicare Advantage and Traditional Medicare: Is the Balance Tipping?” isn’t quite ready to conclude the balance has shifted, but it presents some compelling statistics. Enrollment in Medicare Advantage plans has been growing steadily for the past ten years. It went from 16% in 2006 to 24% in 2010 to 31% in 2015. By way of comparison, the highest rates previously achieved were in the late 1990s, before HMOs generally got a bad rap and went into decline, when 15% of the Medicare population were enrolled.

What is particularly interesting about the new report is that it shows the tremendous geographic variability in HMO penetration. There are areas of the country where over 50% of Medicare enrollees have signed up for a Medicare Advantage plan (9% of people on Medicare live in such areas) and other areas where 40-50% of enrollees have signed up (another 21% of those on Medicare live in these parts of the country). In fact, nearly 2/3 of those who live in counties with high rates of Medicare Advantage use live in just 5 states: California, Florida, New York, Ohio, and Pennsylvania.

The report is purely descriptive. It says nothing about why more people are joining Medicare Advantage plans. It does not even speculate. My guess is that they are attractive primarily because they are simpler. Fee-for-service Medicare Parts A (hospital coverage) and B (physician and lab test coverage) have deductibles and co-pays. If your physician is a “Medicare participating physician,” he must “accept assignment,” which means agreeing to the payment Medicare provides without billing you for the difference between the doctor’s charge and Medicare’s reimbursement—but if the physician is a “non-participating provider” she can both get the standard reimbursement from Medicare and bill the patient an additional amount. The drug benefit, Medicare Part D, makes people select from a dizzying array of plans with varying coverage and cost.

Medicare patients, like every one else these days, are supposed to have “skin in the game.”  Economists and politicians hope that they will choose the best “value for the money,” keeping costs down. But for many people, the choices they have to make, both in selecting a plan in the first place and then in deciding what tests to have and what drugs to take, are hopelessly complicated. Medicare Advantage plans restrict choice—which can be a very good thing if you have a wise and trusted physician narrowing the choices.

Whatever the reasons for Medicare Advantage plans’ appeal to older patients, they offer the possibility of providing higher quality care than the usual fragmented fee-for-service approach to care. They offer a model for truly integrated, streamlined care, in which physicians in the office, the hospital, and the skilled nursing facility share information, maybe even work together. And the model is more likely to work than are “Accountable Care Organizations,” the new form of health care delivery that expects that health care systems will provide coordinated care even though patients have the freedom to go to doctors and hospitals in different systems: the organization is responsible for the cost of their patients' care but have no control over something as basic as which doctors they see or what hospitals they go to.

But if Medicare Advantage plans are going to achieve their promise, and do more than offer patients simplicity, they are going to have to make other changes as well. As I argued back in 1987, in an essay in the Annals of Internal Medicine on “The Impact of Health Maintenance Organizations on Geriatric Care,” these organizations can only survive if they cut costs and the most efficient way to cut costs is by decreasing the rate of hospitalization and, for those who are hospitalized, shortening their length of stay. That’s not so easy to do for older patients, especially if a significant fraction of them are frail and sick. But outpatient medicine that incorporates the principles of geriatric assessment can help, as can case management to coordinate services. In the hospital, the use of geriatric consultation or, better yet, special inpatient units structured to care for frail older people (sometimes called ACOVE or Acute Care of the Vulnerable Elderly units) can minimize the risk of functional decline and iatrogenesis.

Medicare Advantage plans need to recognize that they have an opportunity to do the right thing for older patients—but if they fail to incorporate geriatric know-how into their programs, they are doomed to go the way of their ancestors.