Over the past few years, the number of Medicare Advantage enrollees has exploded, thanks to an increasingly diverse, cost-conscious and aging population that prefers the extra benefits not offered in traditional Medicare and who are familiar with being in a limited network managed by an insurer. The higher costs of traditional Medicare, lack of managed care and fewer benefits may also persuade the newly-eligible to stick with their branded insurance plan. For these reasons, Wagar said insurers should look to their existing Medicaid, individual and commercial business lines as areas of future growth in Medicare Advantage.
For Anthem, 200,000 of its commercial members become Medicare-eligible each year and that the insurer views these newly-eligible enrollees as a way to drive growth, according to Bill Roth, president of Anthem’s Medicare programs.
“These are consumers we already serve today,” Roth wrote in an email. “We understand their needs and are therefore best positioned to deliver high-quality, uninterrupted continuity of care services.”
Insurers could also benefit from moving Medicare and Medicaid dual eligibles to Advantage plans, since they have the most to gain by effectively managing their care, Wagar said. But across the board, he said insurers should take the cues of tech companies like Amazon and invest in market research to better understand what services soon-to-be-eligible enrollees desire.
“Those older, modest income workers will be aging into Medicare eligibility faster,” Wagar wrote. “And if your services are better for them from a health, care, cost and service perspective, you have a match.”
Location can matter too. A recent Drexel University study found that rural Medicare Advantage enrollees were more than twice as likely to switch to traditional Medicare than urbanites, with complaints over network access leading the way for them to switch.
Meanwhile, in areas like South Florida, where over-utilization leads to high healthcare costs, Paul Ginsburg, director of the University of Southern Californa-Brookings Insitute Schaeffer Initiative for Health Policy, said Medicare Advantage insurers can look to implement managed-care as a way to lower healthcare costs, and further attract enrollees. In Miami, for example, Medicare Advantage enrollment is consistently above 60%.
“It’s much harder in some areas where the unmanaged fee-for-service system is actually more efficient and doesn’t have the excesses in the utilization,” Ginsburg said.
While Medicare Advantage can lower the cost of healthcare, these savings are generally not seen in the federal treasury, according to Katherine Baicker, dean of University of Chicago’s Harris School of Public Policy. Companies generally invest the funds in additional benefits for members and lower premiums. Anthem, for example, credits its investments in the social determinants of health—like pest control, fitness products and an allowance for over-the-counter health and grocery items—for driving growth in its Medicare Advantage population.
The federal government can lose out on funds because private companies are generally more aggressive about risk-score coding than the government, Baicker said. A January blog in Health Affairs estimated that CMS will overpay Medicare Advantage plans by $200 billion over the next decade if the coding intensity adjustment remains at its current levels.
“There are lots of mechanisms in place to try to match the payments to Medicare Advantage plans, to the overall health of the people they’re enrolling, not to the overall health of the population,” Baicker said. “But there is a concern that those can be mismatched.”