Medicare Advantage's growth spurt brings tensions
If trends hold, more people will choose a Medicare Advantage plan over traditional Medicare during the open enrollment season that began Sunday.
- That's amping up concern about the way plans are marketed, how the government pays insurers who administer benefits and the way they've turned down millions of requests for coverage of services and drugs.
The big picture: The popularity of Medicare Advantage puts the Biden administration and Congress in a tough spot, contemplating big changes to a program that's hugely popular with voters.
- "We have a lot of responsibility now to make sure that we [don't] just let this thing run itself," said Anne Tumlinson, CEO of consulting group ATI Advisory. "We have to be very vigilant about what consumers are getting."
Where it stands: Fifty-one percent of eligible beneficiaries are currently enrolled in Medicare Advantage — an 8% increase from 2022.
- Nearly 4,000 MA plans were marketed for 2023, a 6% increase from what was available last year. And enrollees say they are generally satisfied with their MA coverage.
- "I don't see anything but growth" for Medicare Advantage, said Mark Miller, executive vice president for health care at philanthropy organization Arnold Ventures.
But there's a steady drumbeat of concern about the way the program is run and its long-term viability, especially coming from providers and Democrats.
- Federal officials have started to rein in misleading marketing of some plans.
- Congress also is leaning on Medicare administrators to revamp the process MA plans use to approve medical services and prescriptions after an inspector general's report last year found high rates of denials.
What's next: At some point, lawmakers will have to tackle more fundamental structural issues, like how the government pays plans.
- It's well documented that Medicare Advantage insurers are overpaid relative to traditional Medicare. Insurers say the current payment structure allows them to offer supplemental benefits like dental and vision coverage and in-home support services that beneficiaries need.
- But there are mounting concerns about excess payments to health plans that aren't supported by patients' medical records, and are in some cases potentially fraudulent. The Biden administration is already working to claw back $4.7 billion of overpayments despite objections from the insurance industry.
- Increased MA spending as enrollment grows puts pressure on a system that's quickly running out of funds, and raises premiums for enrollees in both traditional Medicare and MA.
- Right-sizing MA payment "is long overdue," Miller said. "The taxpayer is getting hit here and the beneficiary is getting hit here."
- MA's entire payment mechanism will eventually require a reset, too. Payments to plans are in part determined based on spending for traditional Medicare beneficiaries. Once MA penetration reaches a certain level, that won't work anymore.
What we're watching: Insurers, recognizing that Medicare Advantage is at an inflection point, have rolled out their own prescriptions for the program.
- Nonprofit, community-based MA plans this summer released "MA for Tomorrow" — an initiative that calls on lawmakers to stop misleading marketing, improve consumer feedback collection, allow for more virtual care and more.
- Better Medicare Alliance, a pro-MA lobbying and advocacy group, plans to release its own policy solutions in the coming weeks, said CEO Mary Beth Donahue. Recommendations will focus on areas including health equity, continued marketing reforms and prior authorization policies, she said.
- "We're engaging with the Hill and the administration already to get their feedback, but it will be ongoing," Donahue said.
But, but, but: A fight earlier this year over a Biden administration Medicare Advantage payment rule showed the political sensitivities around making changes to the program.
- Democrats and Republicans did, however, show a willingness to start talking about how MA plans are paid.
- "People are just taking a closer look," said Jeannie Fuglesten Biniek, associate director of KFF's Program on Medicare Policy.
- There's been "a little bit more scrutiny on how the plans are getting paid, and whether that really is appropriate," she said.