Medicare Advantage And The Future Of Value-Based Care

Medicare AdvantageThe Medicare Advantage (MA) program, which allows Medicare beneficiaries to voluntarily enroll in a private plan that administers health benefits, was established by the Balanced Budget Act (BBA) of 1997 as a vehicle to bring private-sector competition and innovation to Medicare beneficiaries. When the program was announced, the goal was to create greater competition on benefits, care management, and costs, and to offer greater choice and consumer-centricity to America’s seniors.

At the time, value-based care, where providers are reimbursed for the health outcomes of their patients as opposed to the volume of services provided, was not yet the rallying cry of a health system in need of transformation. The impact of private competition on value-based care likely was not even contemplated at the time the legislation was passed. A closer look at the evolution of MA demonstrates that the private sector has proven to be a remarkable laboratory for innovation and progress in our health system’s core evolution—to align the payment and care delivery system with value and the outcomes we care about most for America’s seniors.

A Recent Move Toward Value

Today, approximately one-third of all beneficiaries choose MA insurance coverage. A number of private insurers (also known as payers or health plans) offer MA coverage, resulting in an increasingly competitive marketplace for consumers.

With competition comes lower costs. The average premium for MA plans that include pharmacy coverage will be $40 per month in 2019, down from $46 per month in 2018, and MA plans offer out-of-pocket cost caps to reduce beneficiary exposure to excessive medical costs. Flexibility in MA benefits allows private health plans to provide supplemental benefits such as preventive dental care, vision, and hearing assistance at no additional cost, benefits that are not provided by traditional Medicare. This helps seniors, many of whom are on a fixed budget, limit their exposure to high costs.

The move to value-based care was somewhat more recent and was hastened by the creation of the Center for Medicare and Medicaid Innovation (the Innovation Center) in 2011. There has been broad, bipartisan support of the effort to align the incentives of the payer and provider by rewarding better value and outcomes rather than volume.

Both the Centers for Medicare and Medicaid Services (CMS) and private payers have enthusiastically endorsed a variety of payment models to engage primary care providers, specialists, and health systems in taking accountability for the populations they serve and accepting financial risk for their performance. Examples of such payment models include accountable care organizations, bundled payments, and the comprehensive primary care initiative. Some of these models were initiated by CMS through the Innovation Center, while others came from the private sector, but all have been widely implemented in both traditional Medicare and MA.

Organization and Delivery

There is a stark contrast, however, in how value-based care is organized and actually delivered in traditional Medicare—which is administered by CMS—and Medicare Advantage. In traditional Medicare, the government contracts directly with providers to take risk and responsibility. This forces the provider organizations (whether a primary care practice, a specialist, or a health system) to invest in a wide variety of tools essential for managing population health: analytics infrastructure to assess risk profiles of patients; prevention and wellness programs; care coordination and care management teams to support chronically ill and complex patients; care transition programs; and integration of services delivered in home, community, and health care settings.

Moreover, the emerging recognition that social context has a considerable impact on health outcomes and costs has challenged risk-bearing providers to consider how to systematically address these upstream social determinants of health, such as social isolation, loneliness, and food insecurity. In payment models in traditional Medicare, providers are expected to build or contract for these services themselves to succeed in the mission of delivering better care and better health outcomes at a lower cost.

In Medicare Advantage, the payment models are similar in their financial alignment, but the execution is qualitatively different. Rather than putting that burden on providers alone, private MA health plans have themselves, for years, delivered the services that value-based models are demanding. The analytics, care management, and care coordination programs and efforts around wellness and prevention and quality improvement have been the mainstay of private payers’ delivery models. Thanks to the fact that they generally represent large populations, private payers can execute these services at scale.

Beyond Payment

Another example of how large MA plans can leverage their size to invest in new service models is the partnerships we’re developing with communities to address the social determinants of health. At Humana, where we are CEO and chief medical officer, we’ve committed to investing in the health of seven of the communities we serve: Louisville, Kentucky; Knoxville, Tennessee; Tampa Bay, Florida; New Orleans/Baton Rouge, Louisiana; San Antonio, Texas; Broward County, Florida; and Jacksonville, Florida.

A study of our community-based interventions to improve health, in what we call these targeted “Bold Goal” communities, found that the number of mean unhealthy days declined by 3.1 percent in 2016 in communities, and those improvements have only increased over time. Recognizing that health care is local and there is not one simple solution, our approach to address social determinants of health is driven by the specific market needs within each Bold Goal community. That means interventions including, but not limited to, investing in meal deliveries that include a friendly visitor, transportation, social visits, emergency preparedness to help with anxiety, as well as standardized screening of social and clinical needs in non-traditional settings such as barber shops.

Our success highlights an emerging strategy that private payers can apply to positively impact the health of the communities they serve. For providers that are not participating in large vertically integrated health systems, such responsibility—to address these upstream social needs and determinants of health—would be quite onerous.

But not all of our innovation is taking place upstream. As private payers have learned and improved on how they manage complex, vulnerable members, the large MA plans have blurred the lines between payer and provider. In a competitive environment, MA providers have innovated in a variety of manners. One MA plan is now the largest employer of physicians in the US, and another has merged with a large retail pharmacy and will deliver care at retail sites.

At Humana, we’re actively developing capabilities to deliver, at scale, care in the home by investing in Kindred-at-Home, the largest provider of home care in the US, and integrating that care with owned and partnering primary care organizations. We’re doing this because our members have told us that they want to receive care in their homes, not in the hospital.

Today, each of the three largest MA plans has also integrated their pharmacy benefits and can deliver a more cohesive and coordinated service that does not silo pharmacy and clinical care. Private MA health plans have also made substantial investments in telehealth and analytics to support providers in their quest to deliver more patient-centered care.

A number of researchers and health policy experts have studied and quantified the impact of MA care coordination and population health management efforts. There is compelling evidence to suggest that quality of care in Medicare Advantage is better than or comparable to that of traditional Medicare, while costs are lower. A 2015 study compared quality of care for MA enrollees with diabetes or cardiovascular disease, against the care received by traditional Medicare enrollees with the same conditions; the authors concluded that quality of care was better in Medicare Advantage, requiring less frequent health services usage.

MA is also helping to focus on improving quality and delivering a consumer-centric experience. A 2017 publication sponsored by CMS included 9.9 million beneficiaries from three states and found that MA outperformed traditional Medicare on 16 of 16 clinical quality measures assessed and four of six patient experience measures. These improvements in quality in MA lead to lower acuity postacute care, which translates to improved outcomes and lower cost, as demonstrated by another 2017 study in which MA members had fewer hospital readmissions and more time in the community when compared with traditional Medicare patients. 

Medicare beneficiaries are increasingly choosing with their feet, and enrollment has been growing more rapidly in MA than traditional Medicare. Moreover, recent evidence suggests that MA reduces taxpayer outlays for health care. One recent study even demonstrated a decrease in traditional Medicare spending growth in counties where MA penetration is highest, suggesting that the benefits of MA spill over to traditional Medicare.

While the discussions about health care reform will likely only increase in frequency during this political cycle, both sides of the political spectrum have offered support for the MA program. As we continue our journey to value-based care in this country, it is important to consider the role that Medicare Advantage is playing in delivering improved health outcomes, greater quality, and lower costs. While best practices have not been definitively established, MA offers a very rich laboratory of investment, experimentation, and leadership in value-based care.

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