Regional Variations: The Use Of Hospitals, Home Health, And Skilled Nursing In Traditional Medicare And Medicare Advantage.

In the traditional Medicare program, the use of health care services-particularly postacute care-varies substantially across geographic regions. Less is known about such variations in Medicare Advantage (MA), which is growing rapidly. Insurers that are paid on a risk basis, as in MA, may have incentives and tools to restrain the use of services, which could attenuate geographic variations. In this study of fifty-four million Medicare beneficiaries in the period 2007-13, we found that geographic variations in the use of skilled nursing facility and hospital care in the MA population exceeded those in traditional Medicare, though variations in the use of home health care were greater in traditional Medicare. Within hospital referral regions, the correlations between the use of services in MA and traditional Medicare were moderate to strong. The findings suggest that regional variations in hospital and postacute care reflect local factors that influence beneficiaries' use of services irrespective of the way they obtain coverage.

Medicare Advantage Enrollees More Likely To Enter Lower-Quality Nursing Homes Compared To Fee-For-Service Enrollees.

Unlike fee-for-service (FFS) Medicare, most Medicare Advantage (MA) plans have a preferred network of care providers that serve most of a plan's enrollees. Little is known about how the quality of care MA enrollees receive differs from that of FFS Medicare enrollees. This article evaluates the differences in the quality of skilled nursing facilities (SNFs) that Medicare Advantage and FFS beneficiaries entered in the period 2012-14. After we controlled for patients' clinical, demographic, and residential neighborhood effects, we found that FFS Medicare patients have substantially higher probabilities of entering higher-quality SNFs (those rated four or five stars by Nursing Home Compare) and those with lower readmission rates, compared to MA enrollees. The difference between MA and FFS Medicare SNF selections was less for enrollees in higher-quality MA plans than those in lower-quality plans, but Medicare Advantage still guided patients to lower-quality facilities.

Beneficiaries Respond To California's Program To Integrate Medicare, Medicaid, And Long-Term Services.

In 2014 California implemented a demonstration project called Cal MediConnect, which used managed care organizations to integrate Medicare and Medicaid, including long-term services and supports for beneficiaries dually eligible for Medicare and Medicaid. Postenrollment telephone surveys assessed how enrollees adjusted to Cal MediConnect over time. Results showed increased satisfaction with benefits, improved ratings of quality of care, fewer acute care visits, and increased personal care assistance hours over time. Enrollees also had somewhat better prescription medication access and lower unmet needs for personal care, compared to the comparison group. The lack of improvement in care coordination raises concerns about the implementation of the care coordination benefit, a key feature of the program. The Bipartisan Budget Act of 2018 contains provisions that permanently certify the use of managed care (such as Dual Eligible Special Needs Plans) to integrate Medicare and Medicaid, which makes the lessons learned from California's duals demonstration especially relevant for informing other integrated programs for seniors and people with disabilities.

Projected Coding Intensity In Medicare Advantage Could Increase Medicare Spending By $200 Billion Over Ten Years.

Over the past decade, the average risk score for Medicare Advantage (MA) enrollees has risen steadily relative to that for fee-for-service Medicare beneficiaries, by approximately 1.5 percent per year. The Centers for Medicare and Medicaid Services (CMS) uses patient demographic and diagnostic information to calculate a risk score for each beneficiary, and these risk scores are used to determine payment to MA plans. The increase in relative MA risk scores is largely the result of successful efforts by MA plans to identify additional diagnoses, also known as coding intensity, and not of changes in enrollees' true health. In this article I estimate the effects of coding intensity on Medicare spending over the next decade. Under the moderately conservative assumption that coding intensity will decelerate, Medicare expenditures are expected to increase by approximately $200 billion. CMS has implemented a variety of strategies since 2010 that lessened the impact of coding intensity on Medicare spending; it has a variety of policy responses at its disposal to mitigate the impact going forward. The problem could be largely solved if CMS adjusted for coding intensity using the principle that MA beneficiaries are no healthier and no sicker than demographically similar fee-for-service Medicare beneficiaries, returning to the budget-neutrality approach that was introduced in 2004 and later abandoned.

Less Intense Postacute Care, Better Outcomes For Enrollees In Medicare Advantage Than Those In Fee-For-Service.

Traditional fee-for-service (FFS) Medicare's prospective payment systems for postacute care provide little incentive to coordinate care or control costs. In contrast, Medicare Advantage plans pay for postacute care out of monthly capitated payments and thus have stronger incentives to use it efficiently. We compared the use of postacute care in skilled nursing and inpatient rehabilitation facilities by enrollees in Medicare Advantage and FFS Medicare after hospital discharge for three high-volume conditions: lower extremity joint replacement, stroke, and heart failure. After accounting for differences in patient characteristics at discharge, we found lower intensity of postacute care for Medicare Advantage patients compared to FFS Medicare patients discharged from the same hospital, across all three conditions. Medicare Advantage patients also exhibited better outcomes than their FFS Medicare counterparts, including lower rates of hospital readmission and higher rates of return to the community. These findings suggest that payment reforms such as bundling in FFS Medicare may reduce the intensity of postacute care without adversely affecting patient health.

Provider-Offered Medicare Advantage Plans: Recent Growth And Care Quality.

Hospitals and health systems are increasingly offering their own insurance products, a type of consolidation known as "vertical integration." The relationship between plan-provider vertical integration and quality of care has not been examined extensively or over time. We created a new data set of all vertically integrated Medicare Advantage contracts operating in the period 2011-15 and tracked their characteristics and quality over time. While the percentage of vertically integrated contracts increased slightly between 2011 and 2015, the percentage of all Medicare Advantage enrollees in them declined from 24.4 percent to 22.0 percent. Vertically integrated contracts generally were of higher quality than other contracts, with the largest differences related to enrollee satisfaction. These findings provide the first detailed, longitudinal look at vertically integrated Medicare Advantage plan enrollment and quality.

Little Evidence Exists To Support The Expectation That Providers Would Consolidate To Enter New Payment Models.

Provider consolidation has been associated with higher health care prices and spending. The prevailing wisdom is that payment reform will accelerate consolidation, especially between physicians and hospitals and among physician groups, as providers position themselves to bear financial risk for the full continuum of patient care. Drawing on data from a number of sources from 2008 onward, we examined the relationship between Medicare's accountable care organization (ACO) programs and provider consolidation. We found that consolidation was under way in the period 2008-10, before the Affordable Care Act (ACA) established the ACO programs. While the number of hospital mergers and the size of specialty-oriented physician groups increased after the ACA was passed, we found minimal evidence that consolidation was associated with ACO penetration at the market level or with physicians' participation in ACOs within markets. We conclude that payment reform has been associated with little acceleration in consolidation in addition to trends already under way, but there is evidence of potential defensive consolidation in response to new payment models.

Variation In Accountable Care Organization Spending And Sensitivity To Risk Adjustment: Implications For Benchmarking.

Spending targets (or benchmarks) for accountable care organizations (ACOs) participating in the Medicare Shared Savings Program must be set carefully to encourage program participation while achieving fiscal goals and minimizing unintended consequences, such as penalizing ACOs for serving sicker patients. Recently proposed regulatory changes include measures to make benchmarks more similar for ACOs in the same area with different historical spending levels. We found that ACOs vary widely in how their spending levels compare with those of other local providers after standard case-mix adjustments. Additionally adjusting for survey measures of patient health meaningfully reduced the variation in differences between ACO spending and local average fee-for-service spending, but substantial variation remained, which suggests that differences in care efficiency between ACOs and local non-ACO providers vary widely. Accordingly, measures to equilibrate benchmarks between high- and low-spending ACOs--such as setting benchmarks to risk-adjusted average fee-for-service spending in an area--should be implemented gradually to maintain participation by ACOs with high spending. Use of survey information also could help mitigate perverse incentives for risk selection and upcoding and limit unintended consequences of new benchmarking methodologies for ACOs serving sicker patients.

Recent Growth In Medicare Advantage Enrollment Associated With Decreased Fee-For-Service Spending In Certain US Counties.

Recent increases in Medicare Advantage enrollment may have caused lower spending growth in the fee-for-service (FFS) Medicare population. We identified the counties of largest Medicare Advantage growth and determined if increased enrollment was associated with reduced FFS Medicare spending growth in those counties. We found that 73 percent of counties experienced at least a 5-percentage-point increase in Medicare Advantage penetration between 2007 and 2014, with the most growth occurring in larger and poorer counties in the Northeast and South. The association between Medicare Advantage growth and FFS Medicare costs varied depending on baseline Medicare Advantage penetration: In counties with low baseline penetration, Medicare Advantage growth did not have a significant effect on per capita FFS Medicare spending, whereas in counties in the highest quartile of baseline Medicare Advantage penetration, it was associated with a significant decrease in FFS Medicare spending growth ($154 annually per 10-percentage-point increase in Medicare Advantage). These findings suggest that Medicare Advantage growth may be playing a role in moderating FFS Medicare costs.

Medicare Prescription Drug Plan Enrollees Report Less Positive Experiences Than Their Medicare Advantage Counterparts.

Since 2006, Medicare beneficiaries have been able to obtain prescription drug coverage through standalone prescription drug plans or their Medicare Advantage (MA) health plan, options exercised in 2015 by 72 percent of beneficiaries. Using data from community-dwelling Medicare beneficiaries older than age sixty-four in 700 plans surveyed from 2007 to 2014, we compared beneficiaries' assessments of Medicare prescription drug coverage when provided by standalone plans or integrated into an MA plan. Beneficiaries in standalone plans consistently reported less positive experiences with prescription drug plans (ease of getting medications, getting coverage information, and getting cost information) than their MA counterparts. Because MA plans are responsible for overall health care costs, they might have more integrated systems and greater incentives than standalone prescription drug plans to provide enrollees medications and information effectively, including, since 2010, quality bonus payments to these MA plans under provisions of the Affordable Care Act.

Waiving the three-day rule: admissions and length-of-stay at hospitals and skilled nursing facilities did not increase.

The traditional Medicare program requires an enrollee to have a hospital stay of at least three consecutive calendar days to qualify for coverage of subsequent postacute care in a skilled nursing facility. This long-standing policy, implemented to discourage premature discharges from hospitals, might now be inappropriately lengthening hospital stays for patients who could be transferred sooner. To assess the implications of eliminating the three-day qualifying stay requirement, we compared hospital and postacute skilled nursing facility utilization among Medicare Advantage enrollees in matched plans that did or did not eliminate that requirement in 2006-10. Among hospitalized enrollees with a skilled nursing facility admission, the mean hospital length-of-stay declined from 6.9 days to 6.7 days for those no longer subject to the qualifying stay but increased from 6.1 to 6.6 days among those still subject to it, for a net decline of 0.7 day when the three-day stay requirement was eliminated. The elimination was not associated with more hospital or skilled nursing facility admissions or with longer lengths-of-stay in a skilled nursing facility. These findings suggest that eliminating the three-day stay requirement conferred savings on Medicare Advantage plans and that study of the requirement in traditional Medicare plans is warranted.

High-Cost Patients Had Substantial Rates Of Leaving Medicare Advantage And Joining Traditional Medicare.

Medicare Advantage payment regulations include risk-adjusted capitated reimbursement, which was implemented to discourage favorable risk selection and encourage the retention of members who incur high costs. However, the extent to which risk-adjusted capitation has succeeded is not clear, especially for members using high-cost services not previously considered in assessments of risk selection. We examined the rates at which participants who used three high-cost services switched between Medicare Advantage and traditional Medicare. We found that the switching rate from 2010 to 2011 away from Medicare Advantage and to traditional Medicare exceeded the switching rate in the opposite direction for participants who used long-term nursing home care (17 percent versus 3 percent), short-term nursing home care (9 percent versus 4 percent), and home health care (8 percent versus 3 percent). These results were magnified among people who were enrolled in both Medicare and Medicaid. Our findings raise questions about the role of Medicare Advantage plans in serving high-cost patients with complex care needs, who account for a disproportionately high amount of total health care spending.

Variations in county-level costs between traditional medicare and medicare advantage have implications for premium support.

Concern about the future growth of Medicare spending has led some in Congress and elsewhere to promote converting Medicare to a "premium support" system. Under premium support, Medicare would provide a "defined contribution" to each Medicare beneficiary to purchase either a Medicare Advantage (MA)-type private health plan or the traditional Medicare public plan. To better understand the implications of such a shift, we compared the average costs per beneficiary of providing Medicare benefits at the county level for traditional Medicare and four types of MA plans. We found that the relative costs of Medicare Advantage and traditional Medicare varied greatly by MA plan type and by geographic location. The costs of health maintenance organization-type plans averaged 7 percent less than those of traditional Medicare, but the costs of the more loosely structured preferred provider organization and private fee-for-service plans averaged 12-18 percent more than those of traditional Medicare. In some counties MA plan costs averaged 28 percent less than costs in traditional Medicare, while in other counties MA plan costs averaged 26 percent more than traditional Medicare costs. Enactment of a Medicare premium-support proposal could trigger cost increases for beneficiaries participating in Medicare Advantage as well as those in traditional Medicare.

Medicare Advantage Members' Expected Out-Of-Pocket Spending For Inpatient And Skilled Nursing Facility Services.

Inpatient and skilled nursing facility (SNF) cost sharing in Medicare Advantage (MA) plans may reduce unnecessary use of these services. However, large out-of-pocket expenses potentially limit access to care and encourage beneficiaries at high risk of needing inpatient and postacute care to avoid or leave MA plans. In 2011 new federal regulations restricted inpatient and skilled nursing facility cost sharing and mandated limits on out-of-pocket spending in MA plans. After these regulations, MA members in plans with low premiums averaged $1,758 in expected out-of-pocket spending for an episode of seven hospital days and twenty skilled nursing facility days. Among members with the same low-premium plan in 2010 and 2011, 36 percent of members belonged to plans that added an out-of-pocket spending limit in 2011. However, these members also had a $293 increase in average cost sharing for an inpatient and skilled nursing facility episode, possibly to offset plans' expenses in financing out-of-pocket limits. Some MA beneficiaries may still have difficulty affording acute and postacute care despite greater regulation of cost sharing.

At least half of new Medicare advantage enrollees had switched from traditional Medicare during 2006-11.

With ongoing interest in rising Medicare Advantage enrollment, we examined whether the growth in enrollment between 2006 and 2011 was mainly due to new beneficiaries choosing Medicare Advantage when they first become eligible for Medicare. We also examined the extent to which beneficiaries in traditional Medicare switched to Medicare Advantage, and vice versa. We found that 22 percent of new Medicare beneficiaries elected Medicare Advantage over traditional Medicare in 2011; they accounted for 48 percent of new Medicare Advantage enrollees that year. People ages 65-69 switched from traditional Medicare to Medicare Advantage at higher-than-average rates. Dual eligibles (people eligible for both Medicare and Medicaid) and beneficiaries younger than age sixty-five with disabilities disenrolled from Medicare Advantage at higher-than-average rates. On average, in each year of the study period we found that fewer than 5 percent of traditional Medicare beneficiaries switched to Medicare Advantage, and a similar percentage of Medicare Advantage enrollees switched to traditional Medicare. These results suggest that initial coverage decisions have long-lasting effects.