FutureFocus October 31, 2018: Medicare Advantage Plans 2019: Testing New Payment Models and Care Delivery

Lisa Remington

This week’s FutureFocus, provides the insight into Medicare Advantage Plans in 2019. An increase in the number of plans, geographic reach and widening supplemental benefits increase the need for a continuum of care model. What are the key supplemental benefits offered in 2019? How do MA plans manage post-acute providers to lower the cost of care and better outcomes? We examine answers to these questions.

Lisa Remington, President, Remington Health Strategy Group

By: Lisa Remington, President, Remington Health Strategy Group, Publisher, The Remington Report

It’s the financing structure and increased flexibility of Medicare Advantage (MA) that creates new testing for payment and care delivery innovations. In 2017, Medicare Advantage plans had nearly half (49.5%) of their healthcare dollars in alternative payment models (APMs), compared to 38.3% of dollars in traditional Medicare.

Medicare Advantage plans receive per member per month payments that are adjusted for each enrollee’s age, location, and health status. If the cost of care for enrollees is less than their capitated payments, the plan is able to keep the savings.

Plans are eligible for bonus payments if they demonstrate that they are delivering high quality care, as measured by the Centers for Medicare & Medicaid Services (CMS) through the Star Ratings program. It is this underlying incentive structure that makes Medicare Advantage plans such prime drivers for testing payment and care delivery innovations that align the interests of private payers, patients, and CMS.

"Recent changes to the Medicare Advantage program are presenting plans with opportunities to meet the needs of beneficiaries with high-risk health conditions," said Sean Creighton, a vice president at Avalere. "The trend of more Medicare Advantage plans covering more supplemental benefits to meet the needs of patients positions the program well for continued enrollment growth."

CMS expects 36% of Medicare beneficiaries will have an MA plan next year and that enrollment will increase by 11.5% in 2019 to 22.6 million people.

2019 Number of Medicare Advantage Plans Growing

A Kaiser Foundation report found that payers will offer 2,734 MA plans for individual enrollment in 2019 - an 18 percent increase (417 more plans) from 2018 and the largest number of plans available since 2009. The largest growth will be in Florida.

  • Variation in Number of Plans Across Counties. The number of Medicare Advantage plans will vary greatly across counties in 2019, from more than 50 plans in 6 counties (1% of beneficiaries) to two or fewer plans in 246 counties (2% of beneficiaries), including 115 counties (with 1% of beneficiaries) in which no plans will be offered in 2019.
  • Number of Firms.The average beneficiary will be able to choose from plans offered by seven firms in 2019, with large variation across counties. Seven percent of all Medicare beneficiaries will have a choice of plans offered by two or fewer firms while 19 percent of beneficiaries will be able to choose from plans offered by 10 or more firms.
  • Market Entrants and Exits.Fourteen insurers will be entering the Medicare Advantage market for the first time in 2019, offering products in 26 states. Five insurers, together accounting for about 23,000 Medicare beneficiaries in 2018, will be exiting in 2019, four of which offered SNPs in 2018. These firms account for a small share of the insurers offering Medicare Advantage plans in 2019.

Geographic Variation of MA Plans in 2019

On average, beneficiaries in metropolitan areas will be able to choose from nearly twice as many Medicare Advantage plans as beneficiaries in non-metropolitan areas (26 plans versus 14 plans, respectively).  

In six percent of counties (accounting for 30% of beneficiaries), beneficiaries can choose from more than 30 plans in 2019, including four counties in Ohio (Mahoning, Medina, Trumbull, and Summit) and two counties in Pennsylvania (Bucks and Lancaster) where more than 50 plans will be available.

In contrast, in 8 percent of counties (accounting for 2% of beneficiaries), beneficiaries can choose from two or fewer Medicare Advantage plans, including 57 counties in which only one plan will be available to beneficiaries.

No Medicare Advantage plans will be offered in 115 counties in 2019, down from 149 counties in 2018; these counties account for one percent of beneficiaries, most of whom live in relatively rural areas in California.

Eight other states also have counties in which no Medicare Advantage plans will be offered in 2019 (AK, CO, IA, ID, NE, NV, VA, and WA). Additionally, no Medicare Advantage plans are available in territories other than Puerto Rico.

2019 Supplemental Benefit Offerings

At least 40% of MA plans will be offering new types of supplemental benefits in 2019. For instance, one-third of all plans will cover Nicotine Replacement Therapy (NRT) and close to 10% of plans (429 plans) will offer caregiver support services (e.g., counseling and training courses for caregivers). Other supplemental benefits offered for the first time include in-home support & personal care services, social worker phone line, and adult day care, among others (Table 1).

 Medicare ADvantage Supplemental Benefits 2019 Avalere

 In addition, plans are offering more supplemental benefits under categories that were historically permitted (Table 2). Specifically, in 2019, there will be more MA plans offering transportation benefits, coverage of some over-the-counter (OTC) medicines, and home safety devices & modifications (e.g., shower stools, mobility ramps, night lights, etc.)

Medicare Advantage Plans Benefits 2019 Avalere

How Do MA Plans Manage Post-Acute Care To Achieve Lower Costs And Better Outcomes

  1. MA plans contract with only a select number of post-acute care providers. In order to win these MA contracts, post-acute care providers need to prove their value. They need to convince MA plans that they have lower costs and good patient outcomes.
  2. Second, MA plans have contracts with post-acute care providers that typically pay less then Medicare FFS rates, pay differently (e.g., per stay rather than per day), or require post-acute care providers to take on some financial risks. Such arrangements provide incentives to post-acute providers to discharge patients early to their homes or to a lower cost post-acute care setting.
  3. Third, MA plans use other managed care tools such as prior authorization to limit use of higher cost post-acute care providers. Plans also might impose higher cost-sharing for post-acute care services to incentivize patients to limit their use.
  4. Last but not the least, MA plans use data-driven insights combined with better patient and provider engagement to manage care transitions from acute to post-acute care and to coordinate care across settings. A variety of organizations and consultants help MA plans achieve these goals.

Medicare Advantage plans are looking for providers that can deliver high-quality care, partner on member satisfaction value, provide data driven value, and can reduce the cost of care.