Medicare Advantage (MA) has been an option for seniors since 2003. By all accounts, it’s doing well:
According to the Medicare Alliance, an advocacy group supportive of MA “With a record-setting 99 percent satisfaction rate, an average $1,598 cost savings as compared to Traditional Medicare, demonstrably better health outcomes, and support from a bipartisan supermajority of 403 members of the U.S. House of Representatives and Senate, we at Better Medicare Alliance can say with certainty that the state of Medicare Advantage is strong.”
That’s the bet traditional health insurers like United, Humana and Aetna, upstarts like Bright Health, Clover and Devoted and primary care start-ups like Oak Street and ChenMed are making. The numbers favor their bet: the senior market is growing: the number of seniors 65-plus will increase 30% to 73 million by 2030 and 70% to 95 million by 2060. And Medicare Advantage is expected to increase its proportionate share of this $400 billion market annually for the foreseeable future achieving 50% market penetration by 2030 if not sooner.
Today, Medicare Advantage plans enroll 24.2 million seniors, or 43%. The average senior has almost 40 plans from which to choose: the average monthly premium is around $23 which makes it attractive to price conscious seniors. And CMS has authorized plans to add supplemental benefits like vision and dental care and over the counter therapies to stimulate competition.
Thus, Medicare Advantage seems a solution to two major problems in the U.S. health system: slowing the rate of Medicare spending to extend its solvency beyond 2026, and shifting incentives from fee for service to value-based arrangements with providers to improve care coordination.
MY TAKE
Is MA the solution to the future for Medicare and a template for improving the effectiveness of the health system? Maybe, but it’s not without challenges that require attention from its proponents:
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Risk scores and Star Ratings: As it turns out, the risk scoring methodology by which the clinical complexity of a plan’s enrollees is assessed is being scrutinized by the feds who suspect some have overstated the complexity of their enrollees to get a higher PMPM payment from Medicare. And the Star Ratings on which 5% bonus payments are based do not appear to make consumer comparison shopping more meaningful.52% of plans have a rating of 4 or higher; the average star rating for 2020 is 4.16 vs. 4.06 in 2019 and 4.02 in 2017 and 81% of seniors are covered through a Four-Star plan. So, Star Ratings are more useful to enrollees in eliminating plan options than picking one based on performance.
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Enrollee Acquisition: Thus far, MA enrollment has been straightforward: effective ads and boots on the ground are table stakes. Most seniors do not move from MA plan to MA plan, so recruiting an enrollee means recurring revenue for plan sponsors. But enrollment in middle and higher income senior cohorts has been problematic: their preferences for traditional Medicare fee-for-service are deeply rooted in specific clinicians (in network coverage) and the availability of supplemental (gap) insurance to cover what’s not covered by Medicare.
Both are manageable but assure heightened attention by regulators as Medicare Advantage plans compete.
I think the likelihood that Medicare for All, in whatever form, will replace the U.S. pluralistic public-private payment system is low. It will continue to be debated but the public’s lack of confidence in the federal government remains problematic.
Might Medicare Advantage for All be the alternative? I suspect so, but not without significant alterations in plan design to improve their clinical effectiveness and value proposition for enrollees and additional savings for Medicare. And the Biden campaign’s pledge to lower the age of Medicare eligibility to 60 makes the discussion even more intriguing since life expectancies extend to 80 for many.
Paul
P.S. This week, Congress will debate a relief package for hospitals, small business, and many of the 20 million individuals who lost their jobs. Temporary unemployment benefits for many expire next week, so partisan bickering will no doubt take this legislation down to the wire.
RESOURCES
“Three Reasons Medicare Advantage (MA) is a Viable Framework for America’s Health System: A Strategic Perspective” https://www.paulkeckley.com/the-keckley-report/2019/7/7/three-reasons-medicare-advantage-ma-is-a-viable-framework-for-americas-health-system-a-strategic-perspective-sbhf6?rq=medicare%20advantage
“State of Medicare Advantage: July 2020” Better Medicare Alliance https://www.bettermedicarealliance.org
Nicholas Florko “The CDC has always been an apolitical island. That’s left it defenseless against Trump” STAT July 13, 2020 https://www.statnews.com/2020/07/13/cdc-apolitical-island-defenseless
Frieden “Medicaid Programs Adjusting to Change During the Pandemic” MedPage Today July 15, 2020; https://www.medpagetoday.com/infectiousdisease/covid19/87587
CORONAVIRUS NEWS
Quinnipiac poll: Fauci Most Trusted Public Health Source
Wednesday, Quinnipiac University released a poll showing 65% of the public has faith in Anthony Fauci: that 52% of Republicans, 86% of Democrats and 67% of Independents. Two-thirds, 67 – 30 percent, say they do not trust the information President Trump is providing about the coronavirus. Conversely, nearly two-thirds, 65 – 26 percent, say they trust the information Dr. Fauci is providing about the coronavirus.
“Biden Widens Lead Over Trump To 15 Points In Presidential Race, Quinnipiac University National Poll Finds; Trump Job Approval Rating Drops To 36%” Quinnipiac poll July 15, 2020 https://poll.qu.edu/national/release-detail?ReleaseID=3666
Fair Health: Hospital Costs for Covid Range From $34,662 to $45,683
Fair Health examined claims data for January-May 2020:
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Charges: Nationally, the median charge amount for hospitalization of a COVID-19 patient ranged from $34,662 for the 23-30 age group to $45,683 for the 51-60 age group. The median estimated allowed amounts ranged from$17,094 for people over 70 years of age to $24,012 for people aged 51-60 years.
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Sex: Nationally, males were associated with a larger share (54%) of the distribution of COVID-19 claim lines than females (46%).
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Age: Nationally, during the January-May time frame, COVID-19 was most commonly associated with the age group 51-60, which accounted for 29.9% of the distribution of claim lines with this diagnosis. Children (0-18 years) accounted for the smallest share, 1.5%.
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Co-morbidities: Chronic kidney disease, kidney failure and type 2 diabetes were the most common comorbidity in hospitalized COVID-19 patients, present in 13%of all hospitalized patients with COVID-19.
“Key Characteristics of COVID-19 Patients” Fair Health Brief, July 14, 2020; https://s3.amazonaws.com/media2.fairhealth.org/brief/asset/Key%20Characteristics%20of%20COVID-19%20Patients%20-%20Profiles%20Based%20on%20Analysis%20of%20Private%20Healthcare%20Claims%20-%20A%20FAIR%20Health%20Brief.pdf
Covid Job Losses Add 5.4 Million to Uninsured
Between February and May 2020, 21.9 million workers lost their jobs or left the labor force. An estimated 5.4 million of them became uninsured as a result (At least 16 million of them simultaneously lost access to health insurance formerly furnished by their employers). Nearly half the coverage losses were in five states: California, Texas, Florida, New York, and North Carolina.
“The COVID-19 Pandemic and Resulting Economic Crash Have Caused the Greatest Health Insurance Losses in American History” Families USA July 2020; https://familiesusa.org/resources/the-covid-19-pandemic-and-resulting-economic-crash-have-caused-the-greatest-health-insurance-losses-in-american-history/
HHS Releases More COVID-19 Relief Funds for Safety-Net and Rural Providers
On June 9, HHS announced plans to distribute $10 billion in Provider Relief Fund payments to safety-net hospitals serving our most vulnerable citizens. The agency expects to distribute $3 billion more across 215 acute care facilities, bringing the total payments for safety net hospitals from the Provider Relief Fund to $12.8 billion across 959 facilities. So far, the department has allocated approximately $125 billion from the $175 billion fund authorized by Congress.
“HHS To Begin Distributing $10 Billion in Additional Funding to Hospitals in High Impact COVID-19 Areas” HHS July 17, 2020; https://www.hhs.gov/about/news/2020/07/17/hhs-begin-distributing-10-billion-additional-funding-hospitals-high-impact-covid-19-areas.html
Study: Hydroxychloroquine Ineffective for Early and Mild Covid-19 Patients
In the double-blinded study involving 491 subjects by University of Minnesota researchers conducted from March 22 through May 20, the antimalaria drug hydroxychloroquine didn’t reduce the severity of Covid-19 symptoms in people newly diagnosed and reporting mild symptoms any better than those who received a placebo. About 24% of people given the pills continued to show symptoms such as a cough or fever two weeks after first receiving the treatment, compared with 30% of people given a placebo.
Horby et al “Effect of Hydroxychloroquine in Hospitalized Patients with COVID-19” MedRxiv July 16, 2020 www.medrxiv.org/content/10.1101/2020.07.15.20151852v1.full.pdf
Global Health Security Weak Worldwide
The GHS Index examined 140 characteristics in 6 categories (prevention, detection, rapid response, health system, compliance and risk) for 195 countries. Conclusion: “National health security is fundamentally weak around the world. No country is fully prepared for epidemics or pandemics, and every country has important gaps to address.” Highlights:
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The average overall GHS Index score among all 195 countries assessed is 40.2 of a possible score of 100. Among the 60 high-income countries, the average GHS Index score is 51.9. In addition, 116 high- and middle-income countries do not score above 50.
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PREVENTION: 7% of countries score in the highest tier8 for the ability to prevent the emergence or release of pathogens.
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DETECTION AND REPORTING: 19% of countries receive top marks for detection and reporting.
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RAPID RESPONSE: 5% of countries scored in the highest tier for their ability to rapidly respond to and mitigate the spread of an epidemic.
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HEALTH SYSTEM: The average score for health system indicators is 26.4 of 100, making it the lowest-scoring category.
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RISK ENVIRONMENT: Only 23% of countries score in the top tier for indicators related to their political system and government effectiveness.
“Global Health Security Index 2019 “Johns Hopkins Bloomberg School of Public Health Center for Health Security, October 2019; https://www.ghsindex.org/
Census Bureau, Gates Foundation: Food Insecurity Impacts 25 million, in U.S., 690 Million Worldwide
Per the US Census Bureau weekly Household Pulse Survey and data from the Supplemental Nutrition Assistance Program (SNAP), during the first eight weeks of the survey, an average of 24.9 million adults were unsure at some point in the week about where their next meal would come from. The data also shows that Black and Hispanic Americans make up a disproportionate number of households both with respect to food insecurity.
Related: According to a new United Nations report, “The State of Food Security and Nutrition in the World 2020” funded by the Gates Foundation:
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690 million people, 8.9% of the world’s population, went hungry last year, up by 10 million since 2018 and an increase of 60 million since 2014.
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840 million people will be undernourished by 2030.
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The prevalence of undernourishment in Africa (19.1%) was twice as high as the global average, while more than half the number of undernourished individuals (381 million) reside in Asia.
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Covid-19 is likely to exacerbate the scenario as early estimates show between 83 million and 132 million people will go hungry this year from the effects of the pandemic.
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The cost of a healthy diet is 60% higher than the cost of the nutrient adequate diet, and almost 5 times the cost of the energy sufficient diet; 3 billion people in the world cannot afford a healthy diet in 2017.
“The State of Food Security and Nutrition in the World 2020” http://www.fao.org
IRS: For-Profit Hospitals Must Pay Taxes for Relief Funds
On July 6, the IRS announced that grants received from the COVID-19 Provider Relief Fund by for-profit healthcare providers will be treated as income and subject to the 21% corporate tax rate. The Federation of American Hospitals, American Academy of Family Physicians, American College of Physicians, American Hospital Association, American Medical Association, and U.S. Chamber of Commerce had asked congressional leaders on June 25 to change the policy so that for-profit providers don’t have to pay taxes on the grants.
“Frequently Asked Questions about Taxation of Provider Relief Payments” Internal Revenue Service July 15, 2020; https://www.hhs.gov/sites/default/files/provider-relief-fund-general-distribution-faqs.pdf
INDUSTRY NEWS
EHR Players Align Cloud Partnerships
Cerner Corp., Allscripts Healthcare Solutions and Meditech announced new or expanded agreements in the past year with the cloud arms of Amazon, Microsoft Corp. and Google, respectively.
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Last week, Allscripts announced a five-year extension of its agreement with Microsoft, under which Allscripts will create a cloud-based version of its Sunrise EHR on Azure, Microsoft’s cloud computing service.
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In October 2019, Meditech announced a partnership with Google Cloud to host a cloud-based version of its Expanse EHR.
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In July 2019, Cerner named Amazon Web Services its preferred cloud provider as part of an agreement to build out its software.
Nicholas Florko “The CDC has always been an apolitical island. That’s left it defenseless against Trump” STAT July 13, 2020 https://www.statnews.com/2020/07/13/cdc-apolitical-island-defenseless
Study: Outcomes in U.S. Lower Than in UK
In this cross-sectional study including 18,572 persons from the Health and Retirement Study (HRS) and the English Longitudinal Study of Ageing (ELSA) for 2008-2016, the health gap between the bottom 20% and top 20% of income distribution was compared using 16 health outcomes (5 self-assessed outcomes, 3 directly measured outcomes, and 8 self-reported physician-diagnosed health conditions). Results:
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On 13 of 16 outcome measures, the health of US adults is poorer than that of their peers in England, especially those from the lower end of the income distribution.
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Among individuals in the lowest income group in each country, those in the US had significantly worse outcomes on 10 of 16 outcomes in the bottom income decile; the significant differences in adjusted prevalence of health problems in the US vs England for the bottom income decile ranged from 7.6% vs 3.8% for stroke to 75.7% vs 59.5% for functional limitation.
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Among individuals in the highest income group, those in the US group vs England group had worse outcomes on 4 of 16 outcomes in the top income decile; the significant differences in adjusted prevalence of health problems in the US vs England for the top income decile ranged from 36.9% vs 30.0% for hypertension to 35.4% vs 22.5% for arthritis.
Related: Comparing health systems in developed countries is challenging. “The US spends more on health care and less on social services nationally than other high-income Organization for Economic Co-operation and Development (OECD) countries and has poorer outcomes in several key health indicators, including life expectancy and infant mortality.” In comparison, the Netherlands spends a similar percentage of total gross domestic product on combined social and health care services, but has a higher ratio of social to health care expenditures and better health outcomes than the US.
Choi et al “Comparison of Health Outcomes Among High- and Low-Income Adults Aged 55 to 64 Years in the US vs England” JAMA Intern Med. July 13, 2020. doi:10.1001/jamainternmed.2020.2802
Carlson et al “Assessing Quantitative Comparisons of Health and Social Care Between Countries” JAMA. July 15, 2020. doi:10.1001/jama.2020.3813
CMS proposal: Change Medicare Severity Adjustment Methodology to Negotiated MA Rates
The issue: the proposed change in how CMS calculates Medicare severity DRG payments for inpatient care. CMS wants to use median payer-specific negotiated rates for all Medicare Advantage and third- party payers since presumably that information would be disclosed already (Hospital Price Transparency Executive Order for 300 shoppable services)
“CMS proposes market-based’ MS-DRG weighting methodology to replace RBRVS” Modern Healthcare July 13, 2020; https://www.modernhealthcare.com/payment/providers-payers-hint-they-will-sue-cms-over-proposed-ipps-rule
HHS Final Rule Increases Information Sharing for Substance Abuse Coordination
Last week, HHS signed a final rule to improve care coordination for substance use disorder, despite concerns that it might make people less willing to seek treatment. The final rule retains basic protections of patient medical records but removes barriers to coordinated care involving provider record sharing. The rule changes take effect Aug. 14.
“HHS approves substance abuse care coordination rule” Modern Healthcare July 13, 2020; https://www.modernhealthcare.com/law-regulation/hhs-approves-substance-abuse-care-coordination-rule
Oak Street Health Files to Go Public
Last week, Oak Street Health, which operates Medicare-focused primary care centers, filed a registration statement to sell shares to the public netting $100 million to the company. The filing states that as of March 31, 2020, Oak Street employs 260 primary care physicians in 54 centers with revenues of $32.3 million.
“Oak Street Health files for IPO” MarketWatch July 10, 2020 https://www.marketwatch.com/story/oak-street-health-files-for-ipo-2020-07-10
Amazon Pilots Primary Care Clinics for Employees
Amazon plans to open 20 primary care clinics for its 115,000 warehouse employees through a partnership with startup Crossover Health. Amazon’s Neighborhood Health Centers will provide primary care and behavioral health services, physical therapy, pediatric services, and health coaching. Crossover Health offers similar services for Microsoft and Comcast.
“Amazon is launching health clinics for select US employees” Business Insider July 16, 2020 https://www.businessinsider.com/amazon-debuts-employee-health-clinics-2020-7
Biotech Companies Capital Rich
In the second quarter, 2020, biotech companies raised $6.4 billion and IPOs brought in $13 billion–both record highs. With proceeds from follow-on public offerings, the biotech industry raised $24 billion over the course of three months.
“The Record-Breaking Biotech Funding Tsunami Of 1H2020” Atlas Ventures July 15, 2020 https://lifescivc.com/2020/07/the-record-breaking-biotech-funding-tsunami-of-1h2020/
Virginia Mason, CommonSpirit Announce Puget Partnership
Last week, Virginia Mason Health System, a Seattle-based health system announced it plans to merge with a Washington state division of CommonSpirit Health, a Chicago based operator of 137 hospitals with $21 billion in FY2019 revenues.
Tara Bannow “Virginia Mason to merge with CommonSpirit’s CHI Franciscan” Modern Healthcare July 16, 2020 https://www.modernhealthcare.com/providers/virginia-mason-merge-commonspirits-chi-franciscan
House Bill to Cut Medicare Restrictions on Home Telemedicine Introduced
House telehealth caucus leaders have introduced the Protecting Access to Post-COVID-19 Telehealth Act to make some telemedicine flexibilities promulgated during the COVID-19 pandemic permanent. The proposed legislation would authorize CMS to continue reimbursement for telemedicine services for 90 days after a public health emergency ends, as well as giving HHS the authority to waive telemedicine restrictions in Medicare during future emergencies and disasters, as the agency did for COVID-19.
9 million Medicare beneficiaries have received telemedicine services during the pandemic, according to CMS. In the last week of April, nearly 1.7 million beneficiaries received telemedicine services, up from roughly 13,000 beneficiaries that received telemedicine services per week before the public health emergency. It remains to be seen whether telemedicine interest remains at the same level after the pandemic subsides; early research has indicated telemedicine visits have already been on the decline since many hospitals resumed non-emergency care in April.
Jessica Kim Cohen “House bill would cut Medicare restrictions on home telemedicine”; https://www.modernhealthcare.com/politics-policy/house-bill-would-cut-medicare-restrictions-home-telemedicine
CMS puts Joint Commission on Notice
Last week, CMS issued a notice to the Joint Commission that its hospital accreditation program was approved for two years or until mid-July 2022 versus six years authorized in previous CMS reviews. CMS was explicit that the shortened approval period was based on “concerns” related to Joint Commission surveyor performance and the NGO’s practice of consulting with organizations that it also accredited.
The Joint Commission had to make several changes to its survey process before it was approved by CMS for two years: additional training for its surveyors related to off-site location standards, reviews of medical records and the level of detail provided to facilities during briefings “to ensure it does not change the integrity of the survey process.”
Maria Castellucci “CMS shortens Joint Commission’s approval cycle, citing survey issues”; https://www.modernhealthcare.com/safety-quality/cms-shortens-joint-commissions-approval-cycle-citing-survey-issues
BCBS of Massachusetts Launches Global Capitation Model for Primary Care
Blue Cross Blue Shield of Massachusetts will pilot a new payment model for primary care practices next year using a global capitation model. Global payments aren’t new for BCBS of Massachusetts. A 2019 study published in The New England Journal of Medicine found BCBS of Massachusetts’ global budget payments slowed down spending growth while improving healthcare quality.
Brian Dowling “New innovation for independent primary care practices” Blue Cross of Massachusetts July 11, 2020 https://coverage.bluecrossma.com/article/new-innovation-independent-primary-care-practices
OIG: Hospitals Overbill Medicare $1B Using Malnutrition Coding
Hospitals overbilled Medicare $1 billion by incorrectly assigning severe malnutrition diagnosis codes as a major comorbidity to inpatient hospital claims, according to a report from HHS’ Office of Inspector General. The audit covered $3.4 billion in Medicare payments for more than 224,000 claims with a discharge date in fiscal year 2016 or 2017. Based on its sample results, the inspector general estimated hospitals received overpayments of more than $1 billion in fiscal 2016 and 2017.
Hospitals Overbilled Medicare $1 Billion by Incorrectly Assigning Severe Malnutrition Diagnosis Codes to Inpatient Hospital Claims OIG July 15, 2020 https://oig.hhs.gov/oas/reports/region3/31700010.asp
