The healthcare industry—and more specifically, the Affordable Care Act exchanges—would do well to learn from the success of the Medicare Advantage program.
That’s the conclusion of two recent publications, which come at a time when insurers are as bullish as they've ever been about the increasingly competitive MA market.
One of the publications, a recent Health Affairs Blog post, argues that the Medicare Advantage program's core strengths of transparency, accountability and outcomes-based payment ought to serve template for reform and innovation in other commercial healthcare markets.
For example, MA plans offer more consumer-friendly, comprehensive coverage, while traditional Medicare “institutionalizes fragmented care delivery” by keeping hospital, outpatient, physician and drug benefits separate. In addition, the star rating system for Medicare Advantage offers transparency for consumers and pushes insurers to offer higher-quality services to compete.
“Policymakers, commercial payers and provider organizations should view Medicare Advantage for what it is: a national laboratory of competing, consumer-driven, commercial health plans that are continually improving beneficiaries’ healthcare through a system financed on a per capita basis,” write The Heritage Foundation's Robert Moffit and Rita Numerof, Ph.D., and Christen Buseman, Ph.D., of Numerof & Associates.
Furthering that point, a new analysis from the Urban Institute explores why the Medicare Advantage market has been "substantially more robust" than the ACA exchange market, despite the two markets' myriad similarities.
To answer that question, researchers point to some crucial differences in the two markets, noting that compared to the MA program, the ACA exchanges have fewer covered lives in the nongroup market, calculate their benchmark premiums differently, have a risk adjustment system that is less favorable to insurers, and have enrollees who are more price-sensitive.
“ACA marketplaces and Medicare Advantage may seem similar, since they are both highly regulated direct to consumer insurance markets,” Katherine Hempstead, senior adviser at the Robert Wood Johnson Foundation, said in a statement. “Yet MA has been much more successful, due in large part to regulatory features that give insurers greater certainty about bidding, risk adjustment and provider payment.”
Thus, the analysis suggests that policymakers should use MA's best aspects to strengthen the ACA exchanges. For example, they could cap provider payment rates at Medicare rates or a fixed percentage above them; raise enrollment in marketplace plans by increasing premium and cost-sharing subsidies and eliminating short-term plans; standardize cost-sharing within metal tiers; lift the budget neutrality requirement for risk adjustment; and use a higher benchmark than the second-lowest-cost silver plan for calculating premium tax credits.
Despite all the MA program's strengths, however, the program is far from perfect. Some plans have been accused of gaming the risk adjustment system to maximize reimbursement, and the government has indicated that many Medicare Advantage organizations aren’t maintaining accurate provider directories. Recent research has also found that MA enrollees tend to end up in lower-quality nursing homes than their fee-for-service counterparts.