Nowhere in the United States is Medicare Advantage (MA) enrollment as popular as it is in Puerto Rico where more than seven out of every 10 Medicare-eligible adults are enrolled in the program.
While MA plans are frequently praised for the ability to create innovative coverage, a confluence of regulatory factors on the island—including vastly lower reimbursement rates—have brought instability to the island's healthcare infrastructure and created a massive gap in patient care resources.
The result has been a "mass exodus" of healthcare professionals, according to Roberto Pando Cintron, the president of MCS Advantage Inc. and MCS Life Insurance Company.
"We've had a massive exodus of population—we've lost more than 10% of our population since 2010—and health professionals are a key component that are leaving the island," he told FierceHealthcare. "And that includes physicians, nurses, any health professional because everybody gets paid double or triple in Florida, [and] gets better working conditions."
"It's just a huge disparity in the labor market," he said.
Puerto Rico's current struggles have been building for some time. Prior to the passage of the Affordable Care Act, Puerto Rico took steps to increase the market penetration of MA plans. Because the population in Puerto Rico is comparatively poorer than the rest of the U.S., and Medicare Advantage is often seen as a way to cut costs and innovate care, the island went all-in on those plans, driving enrollment up significantly.
The lower premiums and cost-sharing options of MA plans enabled many Medicare beneficiaries on the island to obtain better medical care. But the plans come at a cost: They typically have lower reimbursement rates than traditional Medicare. And that problem became particularly acute in Puerto Rico after the ACA changed the MA reimbursement formula, tying benchmark payments more closely to Medicare costs.
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As Puerto Rico's Resident Commissioner Jenniffer Gonzalez-Colon and Congressman Jose Serrano, D-N.Y., pointed out in a recent letter (PDF) to HHS Secretary Alex Azar, MA plans in Puerto Rico have seen significant disparities in reimbursement costs compared to MA plans elsewhere in the U.S.
MA reimbursement rates were 43% lower in Puerto Rico than the average reimbursement rate for the entire U.S. The island is unique even among nonstate territories—average reimbursement rates in Puerto Rico were 26% lower than those received by providers in the U.S. Virgin Islands.
"This disparity has to end if we have any hope of improving the precarious health system of the island," the Congressmen wrote in the letter. "Doing so will correct historic disparities in the administration of the island's MA program, while also reducing costly migration, curbing physician shortages, and improving overall health."
Massive MA popularity skews formula
MA plans are more popular in Puerto Rico than any other state, and it isn't close.
Over 75% of the Medicare-eligible population in Puerto Rico was enrolled in an MA plan in 2016, according to CMS. Of the 505,001 beneficiaries in Puerto Rico over the age of 65 with Medicare Part A and Part B, 89.7% had an MA plan—a participation rate that dwarfed every other state that year.
That isn't an accident. A large proportion of Puerto Ricans have government-assisted healthcare coverage, according to Pando Cintron, so the government made it a priority to integrate Medicare and Medicaid for dual-eligible beneficiaries and to encourage low-cost MA plans.
That might not have been a problem until the ACA changed the way MA reimbursement rates are calculated. Beginning in 2010, the law tied the MA reimbursement benchmark to the estimated cost of traditional Medicare. While that formula worked on the mainland, it didn't translate to a population where hardly anyone is on traditional Medicare.
"We have, as of today, we only have around 60,000 Medicare A/B beneficiaries outside of MA—that don't have MA in Puerto Rico. And we have close to 580,000 people in MA," Pando Cintron said. "So we're basing the estimated MA rates—or cost structure of our healthcare system—on about 8-10% of the Medicare population that is in traditional Medicare on the island."
"We think the sample is too low, we think it's not representative of the healthcare profile and the healthcare risk that is mainly served through MA," he added
As a result, between 2012 and 2017, reimbursement rates in Puerto Rico dropped five to six percentage points a year. In 2019, MA payments in Puerto Rico will be 43% lower than average U.S. payment.
A starved healthcare system
This chronic underfunding has significantly stunted the growth of Puerto Rico's healthcare system. With such low MA rates, and with MA plans using half of all healthcare resources on the island, providers simply lacked the funding to hire the best specialists and maintain up-to-date equipment.
"I think there's no question that the low payment rates have led to really a lack of development in the infrastructure. And not only in Medicare; in Medicaid, payments have been constrained also," said Stephen Zuckerman, senior fellow and vice president of health policy at the Urban Institute.
The Medicaid problem has been alleviated somewhat. The federal hurricane relief package last year increased the federal match with Medicaid to a similar rate as the rest of the U.S. through September 2019, according to Cornelia Hall, a policy analyst at Kaiser Family Foundation. But in many ways, the damage was done before Hurricane Maria devastated the island last year.
Zuckerman co-authored a comprehensive assessment (PDF) of Puerto Rico's healthcare infrastructure in January 2017—before Hurricane Maria unleashed its damage on the island. That report found an underinvestment in healthcare resources in Puerto Rico due to low payment rates—scaring off specialists, and robbing hospitals and healthcare systems of necessary funds.
As a result, both the physical healthcare infrastructure in Puerto Rico and the island's IT resources are significantly diminished compared to the rest of the U.S.
Pando Cintron still believes MA plans have enormous advantages for Puerto Rico and are the way forward—but unless the payment disparity is addressed, they will continue to underfund providers. To that end, the Medicaid and Medicare Advantage Product Association, which Pando Cintron belongs to, has sent a series of letters (PDF) to CMS and HHS asking them to look into the reimbursement issues for Puerto Rico.
"We are U.S. citizens, we pay Medicare and Medicaid tax," said Pando Cintron. "But, we've stayed way behind. You know, the healthcare system here is not what you see in any other state. It's sort of an underlying funding issue."