MedPAC explores standardized plan options in Medicare Advantage

Affordable Care Act (ACA) plans may not be the only ones to introduce standardized options, as a key advisory panel wants to apply a similar strategy to the popular Medicare Advantage (MA) program. 

The Medicare Payment Advisory Commission (MedPAC), which advises Congress on Medicare issues, is researching how standardized benefit options would work for MA. The goal is to include the findings in an annual report to Congress next year and explore how standardization could help simplify choice for seniors. 

“I think there’s some reasonable evidence about the challenges of choice,” said Michael Chernew, the commission chair, during the panel’s Thursday meeting.

MA plans are required to offer services under Medicare Parts A and B, but there are some differences based on cost-sharing and other supplemental benefit packages. The MA program has gained in popularity in recent years and with it an abundance of plan choices for seniors.

Commission staff gave an example of how standardized benefit packages work by breaking out three options based on how generous they were for cost-sharing. What types of plans would be subject to the standard package would have to be decided and could be vital.

“This requirement would aim to ensure a minimum level of access to standardized plans, but its impact could be limited if the plans that insurers are required to offer are unpopular,” said MedPAC staff member Eric Rollins.

Letting insurers offer both nonstandardized and the standard options could also help reduce any disruption for existing enrollees but could reduce any gains from standardization, he added. Only offering the standardized benefit plans, on the other hand, could cause too much disruption.

There could be a benefit to insurers, though, by avoiding paying a broker that guides seniors through different plan options. 

“There’s a huge financial incentive for them,” said commission member Lynn Barr.

However, some commission members were concerned about the impact standardization could have on plan innovation. 

“I think it is very difficult to get innovation through consensus and even worse consensus that has to go through a bureaucratic process,” said commission member Gregory Poulsen. “We lose the ability to have laboratories for innovation.”

The research comes as MA plans are facing scrutiny over their marketing practices. Sen. Ron Wyden, D-Oregon, launched a probe last month on aggressive marketing tools used to steer seniors to plans.

ACA plans are going to have standardized plan options starting next year, and MediGap plans already have standard options. However, the standardization effort for the ACA exchanges has drawn significant opposition from insurers, which say the new rules could stifle innovation.