NYAPRS Note: Medicare advantage plans came under scrutiny in recent years for schemes that “gamed” financial risk by being selective about certain clients, and forming niches in lucrative areas without giving adequate care across a broader health spectrum. But as market options increased through the Affordable Care Act, many plans with diversified products—a private and public consumer base, or a BH special needs plan—were successful in transforming into attractive specialty plans. As NY moves to an integrated and accountable system, more managed care companies will consolidate and expand specialty products like Medicare Advantage to meet the needs of all of their clients; not only out of best practice, but to capture higher rates from the employers, the state, and the federal government. Ultimately, this could be advantageous to consumers, as MCOs compete less over regional reach and care management and more over quality specialty services, incentives to consumers, and more robust networks.

 

Medicare Advantage Grows, Defies Forecasts

Wall Street Journal Market Watch; Glenn Ruffenach, 6/2/2014

 

Medicare Advantage plans were supposed to fall out of favor with the passage of the Affordable Care Act. But a recent report from the Kaiser Family Foundation indicates that these plans are more popular than ever.

In a Medicare Advantage plan, participants receive Medicare benefits through private health plans, such as health maintenance organizations. Started in the 1970s (under a different name), Medicare Advantage plans now account for about 30% of all Medicare spending, or a projected $156 billion in 2014.

The Affordable Care Act, starting in 2011, at first froze and then began reducing payments to Medicare Advantage plans. The reason: The government was paying 14% more per beneficiary in Medicare Advantage plans than it was for participants in traditional Medicare plans. As the cuts took effect, enrollment in Medicare Advantage plans was expected to shrink to under 10 million beneficiaries this year from about 11 million beneficiaries in 2010.

Today, though, almost 16 million people – an all-time high – are enrolled in Medicare Advantage plans. That figure is about 6 million higher than the Congressional Budget Office projected in 2010. What’s more, the CBO now forecasts that enrollment will hit 22 million by 2020, or more than double the number estimated in 2010.

Why the reversal? Kaiser, a nonprofit that specializes in health-policy analysis, points to several factors.

First, observers expected that the reduced payments to Medicare Advantage plans would prompt insurers to hike premiums or eliminate selected benefits – or simply pull out of the Medicare Advantage business. But reactions have proved to be less dramatic. Some plans did consolidate or end coverage, but others have been moving into new geographic areas and expanding coverage.

Second, at the same time that payments to Medicare Advantage plans were being reduced, plans that met goals for quality improvement were receiving bonuses from the Centers for Medicare and Medicaid Services. The bonuses helped offset the reductions and were used to provide more benefits to enrollees – which attracted more individuals to Medicare Advantage plans.

Third, monthly premiums actually declined, on average, in Medicare Advantage plans – to $35 in 2014 from $44 in 2010.

Overall, Medicare Advantage plans today “may be looking for ways to tighten their belts and maintain profits,” the Kaiser report notes. “But the changes thus far do not seem to be scaring seniors away.” Put another way, if you’re approaching Medicare enrollment, Medicare Advantage plans could be a more attractive option than many people imagined.

http://blogs.marketwatch.com/encore/2014/06/02/medicare-advantage-grows-defying-forecasts/