Financial Performance of Medicare Advantage Contracts in 2014 and Plan Renewal, Consolidation, and Termination Rates in the Subsequent Year.

BACKGROUND: Starting in 2014, the Affordable Care Act mandated that Medicare Advantage (MA) contracts spend at least 85% of total revenue on claims and quality improvement [ie, the medical loss ratio (MLR)] and submit revenue and cost data annually in MLR reports. These reports can improve transparency of the financial performance of MA contracts. However, little is known about revenues and costs of insurers that participate in MA and its impacts on status changes in the following year. OBJECTIVE: To characterize revenues and costs of MA contracts in 2014, with a focus on MLRs and gross margins, and to assess heterogeneity in subsequent-year plan renewal and termination rates by gross margins. RESEARCH DESIGN: Cross-sectional data from MLR reports submitted in 2014 by MA contracts and from 2015 Part C & D Plan Crosswalk Files regarding plan renewal, termination, and other status changes from 2014 to 2015. SUBJECTS: Three hundred eighty-nine MA contracts. MEASURES: Primary outcomes are MLRs and gross margins. RESULTS: MLRs averaged 93% in 2014; 11% of contracts reported MLRs of at least 100%. Fifty-six percent reported negative margins, or costs that exceeded revenues. Seventeen percent of plans in contracts in the lowest quartile of gross margins were terminated in 2015, compared to under 5% of plans in the highest-margin contracts. CONCLUSIONS: In 2014, MA contracts reported MLRs greater than the mandatory minimum of 85%. Gross margins likely contribute to trends in plan and insurer availability. MLR reports from subsequent years can help explain fluctuations in insurers' participation in MA.

Disease-Specific Plan Switching Between Traditional Medicare and Medicare Advantage.

INTRODUCTION: Previous research has reported switching from traditional Medicare (TM) to Medicare Advantage (MA) plans increased from 2006 to 2011 at the aggregate level, and switching from MA plans to TM also increased. However, little is known about switching behavior among individuals with specific chronic diseases. OBJECTIVE: To examine disease-specific switching patterns between TM and MA to understand the impact on MA plans. METHODS: Using the 2006 to 2012 Medicare Current Beneficiary Survey, we examined disease-specific switching rates between TM and MA and disease-specific ratios of mean baseline total Medicare expenditures of beneficiaries remaining in the same plan (stayers) vs those switching to another plan (switchers), respectively. We focused on beneficiaries with 1 or more of 10 incident diagnoses. RESULTS: Beneficiaries with a new diagnosis of Alzheimer disease and related dementias, hypertension, and psychiatric disorders had relatively high rates of switching into MA plans and low rates of switching out of MA plans. Among those with new diagnoses of psychiatric disorders and diabetes, more costly beneficiaries (those with higher costs) switched into MA plans. For cancer, more costly beneficiaries remained in MA plans. CONCLUSION: Together, these results suggest that MA plans may have not only higher caseloads but also a more costly case mix of beneficiaries with certain diseases than historically was the case. Our findings can help inform MA plans to understand their beneficiaries' disease burden and prepare for provision of relevant services.

Costs and Outcomes of Medicare Advantage and Traditional Medicare Beneficiaries After Total Hip and Knee Arthroplasty.

INTRODUCTION: Medicare Advantage (MA) has increased popularity among eligible participants by providing additional benefits from a private insurer, but these plans are omitted from several government cost savings programs, including bundled payment models. The purpose of this study was to determine whether 90-day episode-of-care (EOC) costs and outcomes were different for patients with MA plans undergoing total joint arthroplasty compared with traditional Medicare patients. METHODS: We reviewed claims data for a consecutive series of patients undergoing primary total hip and knee arthroplasty from 2015 to 2018 at our institution with traditional Medicare coverage or MA through a single private insurer. Demographics, comorbidities, 90-day costs, readmissions, complications, and discharge disposition were compared between the groups. A multivariate regression analysis was performed to determine the independent effect of insurance status on EOC costs and outcomes. RESULTS: Of the 10,869 patients in the study, 1,076 (9.9%) were covered under an MA plan. MA patients were more likely to be discharged to a rehabilitation facility (19% versus 14%, P < 0.0001). No significant differences were observed in length of stay (1.88 versus 1.88 days, P = 0.1439), complications (3.9% versus 3.5%, P = 0.4554), or readmissions (5.9% versus 4.9%, P = 0.1893). EOC costs were significantly higher for the MA group ($21,347 versus $19,551, P < 0.0001). DISCUSSION: Patients with MA have higher total EOC costs than traditional Medicare beneficiaries with comparable short-term outcomes after total hip and knee arthroplasty. Further study is needed to determine whether alternative payment models in MA patients can improve care and reduce costs.

Plan-provider integration, premiums, and quality in the Medicare Advantage market.

OBJECTIVE: To investigate how integration between Medicare Advantage plans and health care providers is related to plan premiums and quality ratings. DATA SOURCE: We used public data from the Centers for Medicare and Medicaid Services (CMS) and the Area Resource File and private data from one large insurer. Premiums and quality ratings are from 2009 CMS administrative files and some control variables are historical. STUDY DESIGN: We estimated ordinary least-squares models for premiums and plan quality ratings, with state fixed effects and firm random effects. The key independent variable was an indicator of plan-provider integration. DATA COLLECTION: With the exception of Medigap premium data, all data were publicly available. We ascertained plan-provider integration through examination of plans' websites and governance documents. PRINCIPAL FINDINGS: We found that integrated plan-providers charge higher premiums, controlling for quality. Such plans also have higher quality ratings. We found no evidence that integration is associated with more generous benefits. CONCLUSIONS: Current policy encourages plan-provider integration, although potential effects on health insurance products and markets are uncertain. Policy makers and regulators may want to closely monitor changes in premiums and quality after integration and consider whether quality improvement (if any) justifies premium increases (if they occur).