In recent years, CMS has made dramatic changes to the regulation of Medicare health benefits. In this blog we discuss the emphasis the agency has placed on flexibility. Two January reports from Deft Research -- 2021 Medicare Shopping and Switching and The National Medsupp+OMO to MAPD Study-- illuminate the value of flexibility in Medicare benefit design. Clients of the second study receive an online market simulator capable of testing the competitiveness of benefit designs with an unlimited number of scenarios. The use of this tool has helped many MAPD's make the decision to change and expand the design of their benefits.
In 2018 and 2019, the Centers for Medicare & Medicaid Services (CMS) expanded the types and flexibility of supplemental benefits that Medicare Advantage (MA) organizations can offer to their enrollees. The changes are dramatic because they demonstrate a shift in the underlying principles of health insurance regulation.
The new CMS approach emphasizes flexibility over equality.
Historically, health insurance regulators approached consumer protection through the principle of equality. Under Equality all MA's had to offer substantially the same benefits to all of the enrollees of a particular plan. This was to ensure all enrollees have access to the same care and that nobody was treated inequitably.
Under the new approach, the principle of flexibility depending on need is emphasized. Not all benefits have to be offered to all enrollees of a plan -- for instance, the cost sharing for diabetics can be reduced without similar reductions being offered to other consumers. Under Flexibility supplemental benefits can be organized for the specific needs of individuals, rather than defined as one-size fits all. For example, in-home services can be delivered by medical or non-medical personnel depending on the need.
According to an analysis by Milliman, for the 2021 plan year, expanded supplemental benefits are included in 575 MA plan benefits. This is a significant increase from 351 plans offering expanded benefits in 2020. We view the increase as evidence that MA plans are a responsive vehicle for designing the delivery and financing of expanded benefits.
How This Shows Up When Seniors Switch Health Plans
Whether 2020 MA plans offered or did not offer supplemental benefits is related to whether seniors switched from plans during last fall's Annual Election Period (AEP). The chart below provides evidence from Deft Research's2021 Medicare Shopping and Switching Study.
The chart compares percentages of seniors who switched health plans for 2021 with those who did not. We note that the most flexible benefit, a benefit allowance, sits at the top of the chart as most often noted by switchers as missing. This supports the idea that a flexible allowance which provides some assurance of extra coverage for needs that cannot be foreseen, is highly valued by consumers. Flexibility is linked to trust and both are fundamental to the value perception.
More than 3 million Medicare Advantage beneficiaries chose plans for the 2021 coverage year that provide additional supplemental benefits for chronic illnesses, a major increase over the more than 1 million that signed up in 2020, a new analysis found.
The analysis, released Friday by consulting firm Avalere Health, also found the number of enrollees in MA plans that offer such benefits increased this year compared to 2020. The analysis comes as the Biden administration is likely to make social determinants of health a major priority, with supplemental benefits in MA plans an area in which to address those issues.
“Stakeholders should consider engaging with the Biden administration around their early experiences with [supplemental benefits for the chronically ill] and any policy change that could facilitate their wider adoption,” the analysis said.
The analysis found that this year, 787 MA plans are offering special supplemental benefits that range from meal delivery to pest control and virtual visits. The plans represent 16% of all plans that Avalere analyzed.
“Overall, in 2021, 15% of enrollees in non-employer MA plans are enrolled in plans offering [supplemental benefits], as compared to 6% in 2020,” Avalere said.
The analysis also found that 86% of the total Medicare beneficiary population live in a county with at least one MA plan that offers one of the benefits.
Plans could start to offer the supplemental benefits that were not specifically health-related starting in 2020. This year, plans started offering new benefits like prescription deliveries for those who must stay home due to the COVID-19 pandemic.
“However, the number of plans offering these benefits—and associated enrollment—are relatively small compared to the most prevalent benefits,” the firm said.
The most popular supplemental benefit was meals, with 356 plans employing the benefit. The second-most popular was food and produce with 336 plans, and pest control was a benefit offered by 200 plans.
Avalere looked at the plan benefit package data from the Centers for Medicare & Medicaid Services in 2020 and 2021.
Once eligible for Medicare, the percent of 66-year-olds who experienced barriers in care access was halved and 46 percent fewer seniors avoided care due to healthcare costs.
Medicare coverage increases seniors’ access to care and reduces affordability barriers, a study published in Health Affairs discovered.
“The Medicare program pays for roughly one of every four physician visits in the United States, and in 2019 it covered roughly 60 million people. The program has also long enjoyed favorable public opinion among both seniors and the nonelderly,” wrote the researcher.
“Yet although its scope is broad and opinion among beneficiaries is favorable, a rigorous understanding of how Medicare currently affects access to health care for its enrollees is not available. The greater health needs and lower income of its primarily elderly and disabled population, as well as the high cost of health care, underscore the importance of assessing how Medicare beneficiaries perceive the affordability of their care.”
The study leveraged data from the 2008–17 Medical Expenditure Panel Survey– Household Component (MEPS-HC) as well as the 2008–18 National Health Interview Survey. It compared access to care and care affordability measures between 64 year olds who are pre-Medicare eligibility age and those who were 66 years of age and are Medicare eligible.
The results showed that seniors reported slightly better care access and affordability when they were eligible to enroll in Medicare.
Once they were able to enroll in Medicare, the amount of seniors who said they experienced barriers in access to care dropped by 50.9 percent, such that 1.5 percent of the 66 year old respondents reported this issue.
Additionally, the share of those who said they had access to care but could not afford it dropped 46.0 percent, with 3.7 percent of 66 year olds reporting affordability as a barrier to care. While the number of Americans who encountered affordability barriers in healthcare decreased with age, there was a significant decline after age 64.
When the researcher compared pre-Affordable Care Act statistics with post-implementation results, there was no significant difference in these measures.
“Because Medicare payment rates are often below those set by private payers, it would not be surprising to have found a worsening of access on measures dealing with whether doctors accepted Medicare as insurance, whether respondents had trouble finding a doctor, or whether waiting times were too long,” the study postulated.
However, the research indicated otherwise. Instead of a decline in access to and affordability of care after enrolling in Medicare, seniors reported a slight improvement. This trend continued, in spite of the fact that health tends to decline with age, exacerbating opportunities for barriers in access to care or healthcare costs.
Access to care improved for seniors without a college degree. The researcher tied this development to the ubiquity of Medicare and the fact that, prior to reaching Medicare eligibility, these seniors may have been in jobs that left them underinsured or uninsured.
Affordability improved for non-Hispanic White or Hispanic seniors, when compared to Black seniors.
“When looked at by race and ethnicity, the smaller improvements on affordability measures for non-Hispanic Blacks compared with non-Hispanic Whites may be a reflection of their higher pre-sixty-five enrollment in Medicaid, which requires minimal cost sharing and thus allows less room for improvement when one enrolls in Medicare,” the study suggested.
Dental, prescription drug, or specialist coverage were more affordable for seniors after they became Medicare eligible.
These decreases in barriers to certain supplemental benefits may have been the result of the fact that more Medicare Advantage plans cover these benefits. In fact, prescription drug coverage draws many Medicare-eligible seniors to Medicare Advantage plans.
These results, which demonstrate that Medicare improves affordability and access to care, could be especially important in light of the current presidential administration’s intentions to expand the age of Medicare eligibility or provide a buy-in option.
However, the study’s results did not necessarily support widespread adoption of Medicare.
“Compared with younger populations, a higher proportion of the near-elderly are covered by private insurance, and a smaller share are uninsured,” the researcher explained.
“The near-elderly also have greater health needs than middle-aged people. These attributes may influence whether and how the effects presented here may generalize outside of the samples used in this analysis. The relatively high needs of the near-elderly may have contributed in ways that would not generalize to younger cohorts.”
Instead, the study’s outcomes may be more applicable for policymakers considering a lower age of eligibility for Medicare.