Beneficiaries face a series of complex decisions in enrolling in Medicare coverage, and a key federal panel outlines some of the pain points.
The Medicare Payment Advisory Commission (MedPAC) released its June report to Congress on Monday, where it notes that when an individual becomes Medicare eligible, they have to immediately make a series of decisions about coverage that may be confusing.
Eligible individuals are also tasked with similar decision points at other times in the year, which adds to the complexity, per MedPAC.
"The complexity of the choices and numerous sources of information make it increasingly difficult for individuals to understand the requirements and relevant time frames for enrollment," the commission wrote in the report.
For example, beneficiaries may not have a full understanding of the differences between what Medicare Advantage (MA) plans and traditional Medicare may offer. MA plans generally carry lower premiums and have out-of-pocket maximums, but also have more restrictive networks or utilization management that beneficiaries wouldn't see in the traditional program.
On the other hand, traditional Medicare enrollees may face significant costs for certain services and higher premiums if they choose to add on supplemental coverage like Medigap. MA also often offers additional benefits that aren't available in fee-for-service Medicare, per the report.
In addition, beneficiaries may wish to switch between MA plans or return to the traditional program in the middle of the year, and may not be aware of enrollment periods or eligibility requirements in making changes to their coverage, MedPAC said.
Further muddying the waters is the bevy of direct-to-consumer advertising that comes from MA insurers, brokers and other third parties, according to the report.
Beneficiaries lean on a number of tools to find information about enrollment timelines as well as benefits. The Centers for Medicare & Medicaid Services (CMS) offers multiple platforms, including the online Medicare Plan Finder and several handbooks.
The federally-funded State Health Insurance Assistance Program (SHIP) offers counseling and support for enrollees. However, the report notes funding for SHIP has fallen short of Medicare enrollment growth, which can hinder the ability to reach the full number of people who need support.
Many beneficiaries seek information from insurance brokers who can assist in enrolling in Medicare Advantage, Medigap, Part D and other programs. However, these brokers may have financial incentives to steer enrollees to specific plans or insurers, and bonus payments are not subject to federal limits.
"In our annual focus groups, many beneficiaries report positive experiences working with agents, but some stakeholders have voiced concern that agents have financial incentives to steer beneficiary decision-making toward certain plans over others," MedPAC said in the report.
The commission said that there should be a greater focus in building out free and objective tools that beneficiaries can use to make coverage decisions, and there may be a need for policy action in this area to support that development.
Report throws cold water on hospitals' MA concerns
The advisory group’s report undercuts a key argument often cited by providers seeking additional support from policymakers: that the increased penetration of Medicare Advantage plans, particularly in rural markets, is dangerously dragging providers’ financial stability.
Specifically, a slew of empirical analyses conducted by MedPAC staff showed no evidence of a significant association between MA market penetration and the all-payer margins of hospitals, skilled nursing facilities and home health agencies, on average.
These providers’ margins showed similar changes over time when directly comparing (with controls for potential confounding factors where able) those who saw greater increases in MA enrollment to those with smaller increases, with MedPAC noting that hospitals’ margins have “remained relatively flat or increased slightly from 2013 to 2024, a period during which MA penetration increased substantially.”
MedPAC did find some changes in revenues, costs and utilization trends. For instance, MA enrollees’ average length of stay in fiscal year 2024 was 11.2% longer than fee-for-service beneficiaries, but ran longer (and thereby costlier) for those being discharged to a post-acute care facility. Meanwhile, greater MA penetration was tied to dips in total facility days at skilled nursing facilities, as well as small declines in revenues and costs at skilled nursing facilities and home health agencies.
MedPAC, which has come to similar conclusions in the past, acknowledged that its findings are associative and not necessarily causal, and said that the trends regarding revenues, costs and volumes could be due to other underlying factors in those markets.
“For example, markets with larger changes in MA penetration over the study period had higher baseline levels of hospital utilization, suggesting that those markets may have been on different spending trajectories for reasons unrelated to MA,” the report reads. However, similar concerns for provider margins “were less salient” in light of the commission’s sensitivity analyses and the fact that changes in revenues and costs “may largely balance out” when calculating margins.
MedPAC also noted that staff interviews with provider representatives frequently cited specific behaviors or practices from MA plans that affected their finances, such as higher claim denial rates or more post-acute care discharge friction compared to fee-for-service Medicare. The advisory group also repeatedly stressed that its topline margin findings are “an average over many different types of hospitals, but MA may affect some types of hospitals differently.”
Still, those findings in MedPAC’s report were flatly contested by the American Hospital Association, which said it had “significant concerns with the validity of the findings” and pointed to its past critiques of the commission’s methodology related to MA and provider margins.
“As the commission itself has found, MA has not delivered on its intent to reduce Medicare spending; and yet, despite taxpayers paying billions more to these plans, they routinely delay and deny patients care,” Molly Smith, group vice president of public policy for the American Hospital Association, said in a statement. “In addition, both our own analyses and external evidence show that MA imposes materially greater, and inappropriate, administrative burdens on hospitals and the beneficiaries they serve as compared to Traditional Medicare. We urge MedPAC to carefully consider the role of MA in driving up hospitals’ costs and Medicare spending to strengthen the program so that it works for patients and the providers who care for them.”
MedPAC’s report also included familiar recommendations for Congress regarding Medicare payment system incentives.
For instance, “to bring [fee-for-service] Medicare’s overall payment levels closer in line with provider costs,” the group reiterated its support for “slightly” higher hospital outpatient and inpatient payments and physician payments compared to current law. MedPAC also recommends Medicare adopt site-neutral payment rates “for certain services that can be safely provided in more than one ambulatory setting,” and called for various new data sources and formulas to more accurately set relative payments.