Mrs. Cassidy slowly walks into my office one busy afternoon. Mrs. Cassidy has some serious style. She is wearing a deep orange dress with a bright blue blazer. There aren't too many folks that can pull that outfit off, but she can. She has a wide slow smile, and she speaks with a slow southern drawl that belies her southern roots. This was supposed to be a routine follow up visit for a 67 year old woman with a history of a mechanical mitral valve replacement and coronary disease. Unfortunately, she tells me a story that is concerning for angina. I think she needs a stress test. I quickly look at her insurance, and I let out a somewhat audible groan. She has a Medicare Advantage (MA) plan. I explain to Mrs. Cassidy that we will need to go through an extra step to pre-certify her stress test. She expresses surprise and asks me what she should do. I will tell you what I told her, but first, let me tell you why.
Medicare Advantage Plans: A brief history
Medicare Advantage plans represent the federal government's experiment with delivering care to seniors through private insurance companies. The experiment started as an alternative to the pay-for-whatever-the-doctor-orders model of traditional medicare. Traditional medicare is fee-for-service, which means there are payments made for any and all services delivered. If I think a patient needs a stress test, the patient just goes and gets the test..no questions asked. This can lead to some perverse incentives and results in a lot of services being delivered. Like the parent that abdicates the responsibility of disciplining their child to a reform school, the federal government hoped private insurance companies would mete out the tough love needed to reign in costs.
Tough love meant I was going to have to get 'permission' from the insurance company to do a stress test on Mrs. Cassidy. If my staff was unable to get the test authorized with the information I gave them, I would have to get on the phone with an insurance company physician to plead my case. This seems like a win for the federal government from a cost standpoint. Surprisingly, it's not.
The federal government pays private insurance companies a fixed amount for each enrollee in their plan. In the beginning (prior to 1997), the federal government would pay 95% of what they would have paid had a patient enrolled in traditional Medicare. This saved the government money, but resulted in MA plans making up only 13% of the total Medicare market. In an effort to expand access and have more people enrolled in MA plans, the federal government increased reimbursement to MA plans in 2003 in a bill best known for introducing Medicare prescription drug coverage.
Enrollees in MA plans now cost the taxpayer $1000 more than if the patient had stayed in traditional Medicare, and enrollment in MA plans has risen rapidly to cover almost 30% of all Medicare eligible seniors.
The government has been active in trying to rectify the payment asymmetry by tying reimbursement to risk scores and value. This has not proven to be without its problems.
Scoring risk: You are higher risk if they say you are
In 2004, the Medicare program began to tie payments to private plans to beneficiary risk score. Risk scores are based on diagnoses coded during the year prior to the payment year. Insurance companies responded by investing resources in ensuring 'appropriate' coding. The patients didn't change. But if the patient enrolled in a MA plan, they became higher risk. The evidence clearly showed insurers were upcoding to raise payments.
Measuring value: Harder than it sounds.
Payments were also tied to value -based payments to reward MA plans that provided high quality care. Quality in the MA program is graded on a 5 star scale that is determined from a weighted scale comprised of variables that include adherence to best practice processes (adults should get flu shots) and outcomes. An example of an outcome measure is blood pressure targets. In 2010, the MEDPAC report on quality used blood pressures < 130/80 in diabetics as an outcome measure. Unfortunately, 2010 was also the same year that the ACCORD trial examining aggressive blood pressure targets in diabetics was released: Targeting a systolic blood pressure target of < 120mmHg compared to < 140mmHg did not reduce the composite endpoint of fatal/non fatal cardiovascular events. The world of hypertension was so spooked by this trial that the panel convened to create a national guideline using this trial as evidence that lower was not always better when it came to blood pressure. So it is entirely possible, that in 2010, 5 star plans were those plans that did harm to diabetic patients by having lower blood pressure targets.
In brief, the federal government's experiment in risk-adjusted, value-based payments to private insurance companies has only served to shift health care dollars to insurance companies at increased cost to the taxpayer.
Between January 1st and February 14th each year, if you happen to be enrolled in a Medicare Advantage plan, you can leave your plan and return to original Medicare. John F Kennedy famously said, "Ask not what your country can do for you, ask what you can do for your country". Mrs. Cassidy, do what's right for your country. Choose traditional Medicare.