Medicare Premium Support: Lessons from Medicare Plans and Plan Competition Marsha Gold, ScD, Senior Fellow

Transcription

1 Medicare Premium Support: Lessons from Medicare Plans and Plan Competition Marsha Gold, ScD, Senior Fellow Presentation to the Annual Research Meeting, AcademyHealth, Orlando Florida, June 26, 2012

2 Review Lessons from Medicare s Private Plan Programs for Premium Support Medicare has 30+ years experience with such plans including: 1970s-cost contract work around 1982: Medicare risk (HMO) program 1997: Medicare+Choice (BBA)-more choice and payment reform 2003: Medicare Advantage: more choice and higher payments (2006 Part D) 2009: MIPPA: more requirements for new choices 2010: ACA: tighter payments, quality bonus This presentation highlights lessons learned from studying these plans since the late 1990s for RWJF (M+C), KFF, (MA), others. 1

3 People Like Choice but Not Choosing In open season 2000, only 15% of beneficiaries nationally thought seriously of their choices. Choice is more salient if it is required (new to Medicare, plan makes major change or leaves program). Choice may be more salient now but it also is sticky and may not be reviewed. Beneficiaries are diverse in ways that affect their support needs (disabled versus elderly, cognitive issues, hearing, vision or language problems, low education/health literacy). Understanding of insurance is limited. 2

4 Firms Like Higher Payments and Fewer Requirements PFFS is a good illustration. Option available since 1999 (BBA) but only became popular when MMA raised payment rates. New firms attracted by low entry costs: no network, piggyback Medicare policies. Many firms entered market with PFFS only. At height in 2009, 70% of beneficiaries had plans from 10+ firms, many offering only PFFS. Most of those companies have now exited the market or drastically reduced their role after MIPAA added network requirements. 3

5 Since the MMA (2006), MA Enrollment Has Grown Considerably and This Continues MA enrollment In millions: Other PFFS plans Regional PPOs Local PPOs HMOs % of Medicare beneficiaries % 22% 23% 24% 25% 27% Source: MPR/Kaiser Family Foundation analysis of CMS Medicare Advantage enrollment files, , and MPR, Tracking Medicare Health and Prescription Drug Plans Monthly Report, 2007; enrollment numbers from March of the respective year. Note: Enrollment includes those in individual and group plans, including Special Needs Plans. Other includes cost and demonstration plans. 4

6 Low Premiums with Some Additional Coverage Make MA Attractive Enrollment Weighted Average Monthly Premiums for Medicare Advantage Prescription Drug Plans, Total and by Plan Type, Premiums 2011 Premiums 2012 Premiums $66 $59 $53 $55 $44 $39 $35 $36 $34 $29 $29 $23 $26 $43 $42 Percent Change, Total HMOs Local PPOs Regional PPOs PFFS -20% -20% -20% -9% -24% Source: MPR/KFF analysis of CMS s Landscape Files for and March Enrollment files for Note: Excludes SNPs, employer-sponsored (i.e., group) plans, demonstrations, HCPPs, PACE plans, and plans for special populations (e.g., Mennonites). Includes only Medicare Advantage plans that offer Part D benefits. The total includes cost plans (not shown separately), as well as plans with zero premiums. The premiums for a subset of sanctioned plans were not available in These plans were excluded from this analysis. 5

7 Beneficiaries Want Comprehensive Benefits but Low Premiums Zero premium plans popular (56% of all enrollees in MA-PDs, 65% of HMO enrollees) Growth of PPOs with some provider flexibility, OOP limit, and premiums below Medigap Plans can attract beneficiaries by offering low cost additional benefits (some $$ for eyeglasses, hearing aids) Unclear how well beneficiaries understand risk, costs of care, or cost sharing Fewer beneficiaries have group coverage so more are in the individual market and bring familiarity with PPOs. 6

8 Payment Levels are Important to Firms Ability to Provide Attractive Benefits Firms develop benefit packages taking into payments and expected costs by county Attractiveness of benefit package influenced by payment level since there is little evidence that most plan types are more efficient than Medicare. Limited payment growth under M+C led to benefit reductions and disruptive plan withdrawals Cost sharing is growing over time and may be less visible to most beneficiaries. CMS now limits ability to discriminate against the sick. 7

9 Medicare Payment Level Has Influenced Changes in MA Enrollment Over Time MA enrollment in millions: % of Medicare beneficiaries % 17% 15% 14% 13% 13% 13% 16% 19% 22% 23% 24% 25% 27% Source: MPR/Kaiser Family Foundation analysis of CMS Medicare Advantage enrollment files, , and MPR, Tracking Medicare Health and Prescription Drug Plans Monthly Report, ; enrollment numbers from March of the respective year, with the exception of 2006, which is from April. Note: Includes cost and demonstration plans, and enrollees in Special Needs Plans as well as other Medicare Advantage plans. 8

10 High MA Payments and Design of Part D Program Contribute to Enrollment Growth 25,000, MA-PD Market share of Part D increased from 29% in January 2007 to 37% to April Cumulative Cumulative Enrollment Enrollment (millions) (millions) 20,000, ,000, ,000, ,000,000 Cumulative PDP Enrollment (PDP) Cumulative MA-PD Enrollment (MA-PD) - Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 9

11 Appropriate Regulatory Protection and Oversight is Important to Effective Choice Risk adjustment without it, government overpays and plans have incentive to serve healthy Marketing guidelines and penalties door to door marketing led to abuses, materials may overpromise. Fiscal solvency guidelines, network requirements, quality oversight protect beneficiaries Vulnerable subgroups most at risk 10

12 Large Firms that Can Spread Fixed Costs of Participation Dominate the MA Market Medicare Advantage Enrollment, by Firm or Affiliate, 2012 Other 35% United Healthcare 18% BC/BS affiliate 17% Aetna 3% Kaiser Permanente 8% Humana 17% Total Medicare Advantage Enrollment, 2012 = 13.1 Million Source: MPR/Kaiser Family Foundation analysis of CMS Enrollment files, Note: Other includes firms with less than 3% of total enrollment. BCBS are Blue Cross/Blue Shield affiliates includes Wellpoint BCBS plans that comprise 4% of total enrollment in Medicare Advantage plans. 11

13 A Few Large Firms Also Dominate Most Local Markets Combined Market Share of the Three Firms or Affiliates with the Largest Number of Medicare Advantage Enrollees in Each State, 2012 Source: MPR/Kaiser Family Foundation analysis of CMS Medicare Advantage enrollment files, Note: Includes cost and demonstration plans, and enrollees in Special Needs Plans as well as other Medicare Advantage plans. 12

14 Traditional Medicare Has Shaped MA and Protected Beneficiaries Defined Medicare benefits set a floor on benefits and a benchmark for price comparison Flexible MA cost sharing structures have allowed innovation but regulation has been important to avoid discrimination by health Medicare s scale supports an extensive infrastructure to inform choice and oversight. Little evidence that MA or traditional Medicare has a magic bullet for controlling costs 13

15 Implications for considering Medicare premium support proposals Traditional Medicare is important in protecting beneficiaries vis a vis minimum and uniform nationwide benefits/limits on cost sharing. Adequate plan oversight and support for structured beneficiary choice is important regardless of the form of the program. Because rapid growth in efficiency is unlikely, dramatically lower payments under premium support will either shift costs to beneficiaries or cause firms to depart. 14

16 For More Information M. Gold, G. Jacobson, A. Damico, and T. Neuman "Plan Enrollment Patterns and Trends, 2012" Washington DC: Kaiser Family Foundation, June 2012 at M.Gold. Medicare Advantage Lessons for Medicare s Future New England Journal of Medicine 366 (13), March 29, 2012, pp M.Gold Medicare s Private Plans: A Report Card on Medicare Advantage Health Affairs Web Exclusive, November M.Gold, L. Achman, J. Mittler, and B. Stevens Monitoring Medicare+Choice: What Have We Learned Findings and Operational Lessons for Medicare Advantage Washington DC: Mathematica Policy Research, August at Gold M. Can Managed Care and Competition Control Medicare Costs Health Affairs Web Exclusive, For more information please contact: Marsha Gold at or mgold@mathematica-mpr.com 15 Mathematica is a registered trademark of Mathematica Policy Research.