Radar on Medicare Advantage

In its latest report to Congress, the Medicare Payment Advisory Commission (MedPAC) asserted that the federal government now pays approximately 22% more for Medicare Advantage enrollees than it would if they were enrolled in traditional fee-for-service (FFS) Medicare, for projected higher spending of $83 billion in 2024. That figure came in slightly below projections provided at a January meeting but higher than MedPAC’s previously estimated differences in spending, largely because it accounted for favorable selection. And while the commission said it “strongly supports the inclusion of private plans in the Medicare program,” it maintains that the current payment system is ripe for reform.  

According to MedPAC’s latest Report to the Congress: Medicare Payment Policy, released March 15, the federal government in 2023 paid MA plans roughly $455 billion for serving approximately 31.6 million enrollees — 52% of Medicare beneficiaries with both Parts A and B coverage.

Most seniors are happy with their health benefits, whether they get coverage via Medicare Advantage or traditional Medicare, but some pain points persist across programs. And when it comes to supplemental benefits that have attracted members to MA, a sizable portion of beneficiaries aren’t even using them. That’s according to new research from the Commonwealth Fund, which released results from its 2024 Value of Medicare Survey last month.

The nationally representative survey of 3,280 Medicare beneficiaries found that a whopping 96% of MA members said their coverage fully or somewhat met their expectations, vs. 93% of traditional Medicare enrollees. Medicare-Medicaid dual eligibles, meanwhile, were much more satisfied with MA than their counterparts in traditional Medicare. The most common reasons beneficiaries reported any dissatisfaction with their coverage were a lack of covered services, uncertainty about benefits and affordability issues. MA beneficiaries were slightly more likely to report frustrations with costs and coverage limitations.

After circulating a discussion draft in the first half of 2023, Sen. Bill Cassidy, M.D. (R-La.) on March 14 released his long-awaited bipartisan bill aimed at improving coverage for Medicare-Medicaid dual eligibles. The Delivering Unified Access to Lifesaving Services Act of 2024 calls for comprehensive changes to the way states and plans currently deliver care to dual eligibles, who often have multiple chronic conditions and account for a disproportionate share of spending.

The bill was introduced by Cassidy and his cosponsors, Sens. Tom Carper (D-Del.), John Cornyn (R-Texas), Mark Warner (D-Va.), Tim Scott (R-S.C.) and Bob Menendez (D-N.J). It would, among other things, require all states to establish an “integrated health plan” for duals — either building off their own or existing options — and require managed care organizations to develop and update comprehensive care plans that include a designated care coordinator for each beneficiary. The legislation also includes “passive enrollment” of qualifying dual eligibles into such plans and continuity of care requirements. The legislation also seeks to expand access to Programs of All-Inclusive Care for the Elderly (PACE) to individuals aged 55 and older.

Medicare Part D formularies are becoming more restrictive over time, asserts new research published in the March issue of Health Affairs. Studying Medicare administrative data that included Part D claims and plan formulary characteristics, researchers from the University of Southern California and Blaylock Health Economics found that utilization management tactics such as prior authorization, step therapy and formulary exclusions became far more commonplace between 2011 and 2020. In 2011, an average of 31.9% of drugs were restricted in some form, vs. 44.4% in 2020.

Restrictions varied based on drug costs and the availability of generic alternatives to brand-name drugs. Nearly 70% of brand-name compounds with no generic alternatives were restricted in 2020, compared to 30% of drugs with generic availability. Additionally, the lower the cost of the drug, the less likely it was to be restricted. In 2020, only 16.7% of drugs with generic availability that cost less than $100 per prescription faced restrictions, vs. 83.7% of brand-name only drugs that cost more than $1,000.