The downside of Medicare Advantage: Members more likely to end up in lower-quality nursing homes

To encourage Medicare Advantage plans to contract with higher-quality nursing homes, CMS could require insurers to be more transparent with beneficiaries about the quality of the facilities in their networks. (Pixabay)

Medicare Advantage plans, the increasingly popular privatized insurance option for seniors, appear to steer enrollees to lower-quality nursing homes than traditional Medicare does, according to a new study.

The study, published in the January edition of Health Affairs, examined data for all elderly Medicare beneficiaries who were newly admitted to skilled nursing facilities (SNFs) between 2012 and 2014.

It found that compared to Medicare Advantage enrollees, fee-for-service Medicare patients have a substantially higher likelihood of entering high-quality SNFs—defined as those with lower readmission rates and those that are rated four stars or higher by the Nursing Home Compare quality rankings.

That disparity was less significant when comparing fee-for-service Medicare and higher-quality MA plans, since members of the latter were more likely to select a better-quality nursing home than members of low-quality MA plans.

Overall, however, the findings suggested that in a plan of 1,000 MA enrollees, up to 42 fewer patients would enter a higher-quality SNF than in a sample of 1,000 Medicare fee-for-service patients.

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One explanation for the results, according to the study authors, may be that unlike their MA counterparts, Medicare fee-for-service enrollees aren’t limited by network design when they select a nursing home. Indeed, narrower networks are common in MA plans: An analysis released in October found that 35% of people enrolled in such plans for 2018 have policies that cover 30% or fewer of physicians in the counties where they live. 

To encourage MA plans to contract with higher-quality nursing homes, researchers suggested that CMS could require insurers to be more transparent with beneficiaries about the quality of the facilities in their networks. CMS could also include Medicare Advantage patients in its rehospitalization measures for SNFs, or include SNF outcomes in HEDIS ratings, they said.

In recent years, MA plans have become a bigger and bigger part of the Medicare landscape, accounting for 33% of overall Medicare enrollment in 2017. But the new study on MA and nursing homes adds to a growing body of evidence that these privatized plans have drawbacks.

For example, another study published in this month's issue of Health Affairs found that MA plans with lower star ratings had significantly higher rates of disenrollment by patients with end-stage renal disease in the year after they enrolled, relative to plans with higher star ratings. Those findings suggest, according to the study authors, that “low plan quality may lead to increased expenditures, as this high-cost population generally must shift from Medicare Advantage to traditional Medicare upon disenrollment.”

Similarly, a 2015 study found that patients who needed a long-term nursing home switched from MA plans to traditional Medicare at almost six times the rate of those who did the opposite—a trend that “appears to transfer responsibility to traditional Medicare just as patients enter a period of intensive healthcare needs.”

And a Government Accountability Office report released this summer, which reviewed 126 MA plans, found that 35 of them had disproportionately high numbers of sicker people dropping out—many citing difficulty accessing their preferred providers.