How New Research Can Help Medicare Beneficiaries Choose The Right Health Plan?

In July 2018, Better Medicare Alliance, a Washington, D.C.-based nonprofit, published research compiled by Avalere Health studying the treatment outcomes of chronic condition sufferers who have Original Medicare and compared them with a similar population of people who are enrolled in Medicare Advantage.

The results could potentially affect how Medicare beneficiaries decide to receive their health coverage.

Original Medicare Vs. Medicare Advantage Plans

This particular study compared the two primary coverage options Medicare beneficiaries can typically consider.

One option is to enroll in Medicare Part A and/or Part B (often called Original Medicare), which is the federally funded health insurance program founded in 1965.

The other option is to enroll in a Medicare Advantage plan (full disclosure: one of my companies offers Medicare Advantage plans), which is sold by private insurance companies and offers the same benefits offered by Medicare Part A and Part B under one plan.

Differences In Medical Spending Between Plans

The study found that Medicare Advantage beneficiaries with chronic conditions experienced 23% fewer inpatient stays and nearly 33% fewer emergency room visits than Original Medicare beneficiaries.

This disparity correlates with the study’s finding that Medicare Advantage plan beneficiaries spent more on preventive care and tests, while Original Medicare beneficiaries spent more on inpatient hospital stays and emergency care.

A separate 2016 study from the Medicare Payment Advisory Council (MEDPAC) found that the growth of federal Medicare spending on post-acute care since 2012 has slowed, which may be because of increased Medicare Advantage plan enrollment.

Additionally, there are differences to consider between Medicare Advantage plans: The report from MEDPAC found that of Medicare Advantage plan types, Health Maintenance Organizations (HMOs) outperformed Preferred Provider Organizations (PPOs) on four measures in 2015:

• Completing colorectal screenings

• Documenting body mass index (BMI)

• Advising enrollees to participate in physical activity

• Reducing fall risk

However, PPO plans outperformed HMO plans on other measures:

• Improving or maintaining members' mental health

• Influenza vaccination rates

• Speed of getting appointments

• Overall care coordination

If you're deciding between a Medicare Advantage HMO plan or a PPO plan, consider how some of these measures fit in with your specific needs. You will also want to consider other aspects of HMO plans and PPO plans, such as network restrictions and cost differences of plans in your area.

Differences In Diabetes Care Between Plans

Another takeaway from the Avalere study was the difference in diabetes care between Original Medicare and Medicare Advantage.

Medicare Advantage plan holders with diabetes experienced a 52.6% lower rate of overall complications and a 73.3% lower rate of serious complications than Original Medicare beneficiaries.

Not surprisingly, the lower rate of complications was mirrored by a 5.7% lower overall cost of diabetes care for Medicare Advantage beneficiaries, although those plans spend $828 more per beneficiary on preventive diabetes care.

This seems to suggest that a greater investment in preventive care equates to lower overall health care costs for Medicare Advantage beneficiaries, as well as better overall health outcomes. This consideration extends to all people -- especially those near the age of Medicare eligibility -- regardless of what type of coverage they have. As we age, our health can become more fragile, and the importance of preventive care can grow exponentially.

Key Takeaways And Conclusions

I see several possible explanations for such disparities in patient outcomes, including:

1. Many Medicare Advantage plans may provide prescription drug coverage, which is not covered under Original Medicare. People with a chronic condition may be more likely to treat it and to engage in preventive health measures if they have additional insurance benefits to lower the costs.

2. Many of the additional benefits found in some Medicare Advantage plans (but not offered by Original Medicare) can be helpful in managing one’s health. In my experience, it’s common for Medicare Advantage plans to include memberships to wellness programs along with coverage for dental, vision and hearing care. These additional benefits might encourage a healthier overall lifestyle.

3. Medicare Advantage plans are required to include an annual out-of-pocket spending maximum. Beneficiaries pay nothing for approved care once this annual limit is reached, and they may be more likely to seek care when they have that type of cost-control assurance. Original Medicare does not offer an out-of-pocket spending limit.

4. Many Medicare Advantage plans utilize a primary care physician to coordinate care. This can foster more streamlined communication and treatment plans between the primary care doctor, specialists and beneficiaries, which might lead to less costly outcomes. However, Original Medicare beneficiaries can also select a primary care physician.

5. Medicare Advantage plans sometimes incentivize preventive screenings. This might encourage beneficiaries to catch a condition before it becomes serious, thus improving health outcomes and reducing the chance of high medical care costs.

In my experience, some of the potential disadvantages of Medicare Advantage plans include:

• Plans are offered based on where you live. Not all plans are available everywhere.

• Medicare Advantage plans are typically not available to people with end-stage renal disease (ESRD). In this case, the beneficiary may be able to join a local Medicare Special Needs Plan (SNP) instead.

• Some Medicare Advantage plan networks may limit the number of providers a beneficiary can visit.

Tens of thousands of U.S. adults turn 65 every single day, according to the Pew Research Center, and they're faced with the decision between Original Medicare and Medicare Advantage coverage. As you consider your Medicare coverage options, you may want to give special consideration to any chronic conditions you have and the health habits in your current lifestyle.

If you're proactive in your health, if you take an active role in managing your chronic conditions, or if you want more predictable annual health care costs, a Medicare Advantage plan could be right for you. You may even be able to earn rewards and incentives for the healthy habits you already practice.

You may consider keeping with your Original Medicare coverage if you don't want to pay plan premiums for additional benefits such as dental or hearing care coverage. With Original Medicare, you're also free to visit any provider or hospital that accepts Medicare, with no network restrictions. You won't have the annual out-of-pocket spending limit that is part of all Medicare Advantage plans, but if you have money set aside for potential medical spending, you may feel comfortable with Original Medicare.

Idiosyncratic New York Yankees legend Yogi Berra purportedly said, “When you come to a fork in the road, take it.” Medicare beneficiaries may have more guidance now on which fork to take.

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