MEDICARE ADVANTAGE IN RURAL AREAS: EXPERIENCE UNDER THE MMA

Transcription

1 MEDICARE ADVANTAGE IN RURAL AREAS: EXPERIENCE UNDER THE MMA by Marsha Gold, Sc.D. Senior Fellow Mathematica Policy Research October 10, 2007 For presentation at a briefing for the Senate Finance Committee convened in cooperation with AARP/AMA

2 Overview - I MMA reversed the erosion of private plans in Medicare and led to many more Medicare Advantage options available in rural areas than in the past. While the MMA intended Regional PPOs for this purpose, expansion and enrollment largely was in the previously available PFFS sector. These non network arrangements are easier to set up and were encouraged by MA payment rates substantially above traditional Medicare. 1

3 Overview - II PFFS probably provides a more affordable supplement than Medigap for moderate income beneficiaries BUT It provides much less financial protection than traditional Medigap plans PFFS plans typically have less comprehensive benefits than HMOs. PFFS could prove unstable since the reasons it is easy to set up make it easier for firms to withdraw this option if payments are less favorable. 2

4 Overview - III Access within PFFS depends on physicians willingness to participate not just their technical ability to do so. Many barriers exist to care management in PFFS compared to HMOs and even traditional Medicare. Key Question: Are rural beneficiaries better served by current policy vis-à-vis enhancing benefits and coverage in traditional Medicare? 3

5 Historical Perspective - I Until most recently, HMOs dominated private plan participation and enrollment in Medicare though other options (local PPOs, private FFS) were authorized in 1997 and a rural floor was added to encourage entry in rural areas. Despite floor payments, many fewer beneficiaries in rural beneficiaries have access to an HMO or other managed care option in rural than urban areas. 4

6 Historical Perspective - II In early 2001, PFFS started to enter Medicare though few beneficiaries enrolled in them. Among its objectives, the MMA sought to increase availability of MA in rural areas. Congress authorized regional PPOs for this purpose. 5

7 Distribution of MA Enrollment, Total and HMO (millions) a a a All HMO Source: CMS Monthly Health Plan Summary Report. December ; September for a May include a few enrollees in PPOs/POS but excludes PPO demonstration. 6

8 Distribution of MA Enrollment, September 2007 Other 8% a PFFS 19% R-PPO 2% Local PPO/POS 6% HMO 65% Total Enrollment = 8.9 million Source: CMS Monthly Health Plan Summary Report. a Includes cost, demonstration and other plans. Enrollment in MSAs was 2,267. 7

9 PFFS Enrollment Growth, Selected Dates, December ,178 March ,379,277 December ,835 June ,591,967 a December ,728 September ,709,782 a December ,890 December ,214 December ,990 December ,100 Source: CMS Monthly Report, various years. a Includes 10,572 exmployer direct PFFS enrollees in March 2007 and 10,728 in June

10 Number of Coordinated and PFFS Contracts Available to Beneficiaries By County Type, 2007 All Beneficiaries Urban Beneficiaries Rural Beneficiaries Percentage of Beneficiaries with: CCP a PFFS CCP a PFFS CCP a PFFS None 1.5% 0.3% 0.7% 0.0% 4.3% 0.0% or More Source: MPR analysis of a file created from the 2007 Personal Plan Finder. Note: Contracts reflect unique organizational sponsors. Each contract may include several plans (that is, different benefit packages). Exclude employer-only 800 plans. a Includes R-PPOs which are available to most beneficiaries. 9

11 Firm Perceptions on RPPO vs. PFFS - I RPPO Resources demands high to create provider networks across large geographic areas Challenging to negotiate rates with providers Concerned about market viability of product with uniform benefits over broad areas competing with local plans 10

12 Firm Perceptions on RPPO vs. PFFS - II PFFS Ability to sidestep provider contracts by using Medicare rates Less need for local presence so administrative costs shared nationally Local rates so can vary offerings/marketing by areas Familiar to nationwide brokers and agents 11

13 Major PFFS Firms in MA, 2007 Enrollment Percent of Beneficiaries with Available Plan November 2006 March 2007 All Firms 97% 819,098 1,329,296 Firms with 5,000 + Enrollees Humana 83% 468, ,058 UnitedHealthcare/Pacificare 40% 176, ,064 Wellpoint (Unicare, Anthem) 68% 75,462 98,575 Sterling High 48,222 67,902 BCBS of Michigan Low 28, ,095 Heritage Health Systems a High 15,955 96,087 Coventry b High 0 75,664 Universal Health Care c Medium 0 72,793 Aetna 4% 0 37,064 Wellcare Medium 0 17,721 Harvard Pilgrim Low 0 16,133 Source: MPR analysis of files created from CMS data on enrollment by contract and county. a Includes American Progressive Life and Pyramid Life Insurance Company. b Includes First Health Life, Coventry, and Cambridge Life. c Any, Any, Any Plan. 12

14 Distribution of March 2007 Enrollment by Payment Level County Benchmark All HMO Local PPO R-PPO PFFS Rural Floor ($662) 8.6% 2.8% 7.2% 11.7% 29.4% $663 - $ Urban Floor ($732) $733 - $ $796 - $ $896 and more Total Enrollment (1,000s) (7,606) (5,204) (389) (113) (1,329) Source: MPR analysis of files created from CMS data on enrollment by contract and county. Note: Excludes enrolls in Puerto Rico and the territories and any SNP only contracts. 13

15 PFFS Selling Points One Stop Shopping (if Rx) Premiums substantially less than Medigap Reconfigured Medicare A/B cost sharing (but poorly understood) Potential access to any willing provider Some additional benefits- largely preventive 14

16 Benefits in HMO Versus PFFS MA-PD Plans, 2006 HMOs PFFS All Lowest Premium All a Lowest Premium Average MA Total Premium Per Month $ 39 $ 22 $ 48 $ 44 Percent with Zero Premiums 44% 64% 19% 24% Percent Rx Benefits in Gap 31% 26% 0% 0% PCP copay over $25 1% 1% 0% 0% Spec copay over $25 22% 29% 57% 73% Median Three Day IP Stay -- $ $ 540 Median Three IP Stays b -- $1, $2,340 Source: MPR analysis of a file created from CMS s November 2005 Personal Plan Finder. a Figures only for MA-PDs. 70 percent of PFFS plans had drug coverage; premiums for MA only plans are $38 per month on average, with 20 percent having no premium. Among all PFFS plans, 38 percent have a specialist copay of $25 or more. b Two 2 six day stays and one three day stays. 15

17 Estimated Out-of-Pocket Costs Per Enrollee for Hospital and Physician Services in MA-PD Plans by Type, 2006 Estimated Annual Out-of-Pocket Costs Per Enrollee for Hospital and Physician Services, by Health Statues All HMO Local PPO PFFS Regional PPO All MA-PD (Except SNPs) All $268 $239 $303 $337 $432 Healthy $831 $72 $104 $81 $180 Episodic Needs $686 $621 $749 $911 $983 Chronic Needs $1,656 $1,487 $1,819 $2,254 $2,382 Number of Contract Segments 1, Source: MPR analysis of CMS s November 2005 Personal Plan Finder using HealthMetrix cost sharing methodology. SNP plans are excluded. The method is based on assumptions of use of hospital and physician services by beneficiaries in three categories of health status. Out-of-pocket costs are based on application of actual plan benefits to these assumptions. The all category weights the three groups by the data from the Medicare Current Beneficiary Survey on the share of beneficiaries with at least good, with fair, and with poor health status. 16

18 Question 1 If the major accomplishment post-mma is that over half of all Medicare beneficiaries + 0 now chose among plans from 6+ PFFS sponsors and PFFS enrollment growth accounts for a large share of the growth in MA is this a success? 17

19 Question 2 Beneficiaries are concerned about financial protection but many struggle/cannot afford Medigap. Minorities are disproportionately affected though economic concerns touch most beneficiaries. What is the best solution to this issue? 18

20 For Additional Information Marsha Gold. Medicare Advantage in : What Congress Intended? Health Affairs Web Exclusive May 15, See Marsha Gold. Private Plan in Medicare: A 2007 Update. Washington, DC: Kaiser Family Foundation, March See for this and earlier papers. Marsha Gold and Stephanie Peterson. Analysis of the Characteristics of Medicare Advantage Participation. Report prepared for the Assistant Secretary for Planning and Evaluation. US Department of Health and Human Services, See for this and other papers on M+C/MA. 19

21 ADDITIONAL BACKGROUND

22 Key Features of Selected MA Contracts by Type HMO LPPO RPPO PFFS First Authority TEFRA (1985) BBA (1999) MMA (2006) BBA (1999) Service Area 1+ Counties 1+ Counties 27 Regions 1+ States 1+ Counties Benefits Medicare Actuarial Medicare Actuarial Medicare Actuarial + OOP Limit + Integrated A/B Cost Sharing Medicare Actuarial Benchmark County FFS County FFS Blend County FFS + Bid Over Region County FFS Payment Lower of Bid or 75% Benchmark Lower of Bid or 75% Benchmark Lower of Bid or 75% Benchmark Lower of Bid or 75% Benchmark CMS Risk Sharing No No Yes No Required Part D? 1+ Plan 1+ Plan All Plans No Required Network Yes Yes Yes No Required Baseline Health Assessment and Care Coordination Yes Yes Yes No Required HEDIS Yes Yes Yes No Required QI/UR Yes Yes Yes No 21

23 Cost Sharing/Additional Benefits in Medicare and Medigap, 2006 Medicare Only Medigap C/F Hospital Inpatient Deductible Coinsurance Limits Physician Deductible Coinsurance Out-of-Pocket Limit $952 $230/day (61-90) $476/day (91-150) 150 days/year +60 Lifetime Days $124 20% None None None None C = $124 F = None None (F covers excess) None (but little cost sharing) 22

24 Time Line of Key Events in Medicare+Choice - I Medicare enacted Limited private plan offerings using cost reimbursement to group practice prepayment plans and demonstration authority. Medicare risk (HMO) plans authorized under the Tax Equity and Fiscal Responsibility Act of 1982, Medicare HMO program becomes operational. M+C program adopted as part of the BBA of 1997, absorbing the Medicare HMO program. M+C changes in methods used to se the capitation payment rate take effect. Most other components of the M+C program take effect, including authority of new kinds of plans and expanded beneficiary education. Balanced Budget Refinement Act relaxes quality requirements for PPOs, authorizes new entry bonuses, and expands authority for cost based plans (scheduled to expire in 12002) to Benefits Improvement and Protection Act creates a separate and high urban floor effective March 2001, raises the existing floor, and grants a temporary 1 percent increase in the minimum payment update

25 Time Line of Key Events in Medicare+Choice - II Firs private fee-for-service plan (Sterling offered under M+C M+C authority through 2002 for a Medical Savings Account demonstration with up t o 290,000 enrollees expires with no applications received. M+C provisions limiting ability to switch plans monthly (lock-in) due to become effective but implementation delayed by Congress (HR 3448) until Medicare Modernization Act of 2003 enacted authorizing, among other things, the MA program that absorbs M+C as local plans. Medicare drug benefits and regional MA plans authorized beginning in Authority for cost plans extended beyond 2004 expiration date. Medical Savings Account authority made permanent with fewer restrictions. Lock in delayed from 2005 to Payment changes authorized under the MA for local plans take effect in March. Drug benefit, MA regional plan options, and revised capitation payment methods takes effect Source: Author s analysis. Extracted from Gold, Achman, Mitler, and Stevens Monitoring Medicare+Choice: What Have We Learned? Washington, DC: Mathematica Policy Research, August

26 Trends in Availability of Medicare Private Plans, Urban vs. Rural, Urban Beneficiaries Rural Beneficiaries Percent of beneficiaries Percent of beneficiaries * Only private FFS No coordinated care plans but PPO demonstration 1 coordinated care plan 2 coordinated care plans 3+ coordinated care plans Source: MPR analysis of CMS geographical service areas file and contract withdrawal reports in Gold and Achman, Fast Facts No. 8, December *Projected based on 2004 withdrawal reports and 2003 plan offerings. Extracted from Gold, Achman, Mitler, and Stevens Monitoring Medicare+Choice: What Have We Learned? Washington, DC: Mathematica Policy Research, August