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Medicare Advantage Going Wrong? They're Worried at MedPAC

By John Reichard, CQ HealthBeat Editor

November 9, 2007 -- Worries are growing at the Medicare Payment Advisory Commission over the direction of the Medicare Advantage program—the private health plan side of Medicare—and whether the nation is getting the value it should for the dollars it's spending.

"I fear we are going backwards," MedPAC Chairman Glenn Hackbarth said Friday at a commission meeting. Hackbarth was reacting to data showing spottier quality in newer plans, as well as the growing prominence of "private fee-for-service plans" in Medicare Advantage—known as "MA"—that don't really manage care.

"Evaluating various data sources, what we have found is the most recent data on quality in MA plans show a need for improvement," MedPAC staffer Carlos Zarabozo told commissioners. "They also show that there is substantial variability across plans in their performance, and performance in newer plans is generally poorer" than performance in older plans, he added.

Mohit Ghose, a spokesman for the managed care industry, said analysts should not draw the wrong conclusions from the data, noting that systems to manage and evaluate quality of care are largely missing in traditional Medicare. That means quality of care is largely unknown in the traditional program, and that, by contrast, even MA plans with spottier performance have benchmarks against which to make improvements, noted Ghose, a spokesman for America's Health Insurance Plans (AHIP).

His comments suggest that quality of care in traditional Medicare may be considerably worse.

Zarabozo focused on results from a Medicare survey designed to assess changes in "health outcomes" in MA plans, as well as recent findings from the National Committee on Quality Assurance (NCQA) on the performance of MA plans on specific measures of quality.

The "outcomes" survey questions beneficiaries in MA plans at the beginning of a two-year period and again at the end to get their individual assessments about whether their health had grown better or worse than they expected over the two years. Beneficiaries were asked about both their physical and mental health. The survey has examined two-year periods going back to 1998.

In the most recent assessment—from 2004 to 2006—beneficiaries in only five of the 151 plans surveyed rated their mental health as better than expected. In the 2003–2005 and the 2002–2004 periods, beneficiaries in considerably more plans reported better-than-expected mental health—18 plans and 27 plans, respectively. Beneficiaries in 13 of the plans reported that their physical health was worse than expected in the 2004–2006 study, compared with beneficiaries in zero plans in the 2003–2005 and 2002–2004 studies. Thirteen was the largest number of plans in the history of the two-year surveys in which beneficiaries rated their physical health as worse than expected.

Reviewing NCQA findings released in September on 2006 quality performance, Zarabozo said commercial and Medicaid managed care plans showed greater improvement on a larger number of quality performance measures than did Medicare Advantage plans. MA plans improved on 7 of 38 measures from 2005 to 2006, while commercial plans improved on 30 of 44 and Medicaid plans on 34 out of 43, according to Zarabozo. "For the 30 measures common to MA and commercial plans, commercial plans had better scores than Medicare on 16 measures," he said.

His presentation also looked specifically at one measure, whether diabetics receive routine eye exams to assess whether their vision is declining. Twenty-four percent of Medicare Advantage plans provided those exams for fewer than 50 percent of their diabetic enrollees, and about half provided them for fewer than 60 percent of their diabetic enrollees, according to the 2006 data. Older plans were far more likely to provide the exams than newer plans, a trend noted on almost all measures of quality performance, the MedPAC staffer noted. "New plans are smaller and are more likely to be PPOs, but these factors do not explain lower scores," he noted.

Zarabozo defined 119 MA plans in the analysis as "new," meaning they signed contracts with the Medicare Advantage program on or after June 1, 2004. The plans included HMOs and PPOs but not private fee-for-service plans, which are exempt from requirements to report data on the quality of care. The new plans account for about 15 percent of Medicare Advantage enrollment.

MedPAC Commissioner Jack C. Ebeler called the data "disappointing." Ebeler, the former head of the Alliance of Community Health Plans, an association representing older, more tightly managed HMOs, said "this is not what we are hoping for."

For his part, Hackbarth queried Zarabozo on where Medicare stood in providing data comparing quality in Medicare Advantage to that in traditional Medicare. The staffer said Medicare will be making data available comparing how often MA enrollees and enrollees in traditional Medicare get flu shots, and how they rate overall satisfaction with the care they are receiving.

But Hackbarth weighed in more strongly a few minutes later. "I'm struggling to get to 'disappointed,'" he said dryly, referring to Ebeler's reaction to the data on quality. "I'm more depressed."

Hackbarth's comment seemed as much, if not more, directed at the surging enrollment in private fee-for-service plans, which are paid much more than other MA plans but which do not have networks of providers that attempt to organize care more efficiently and are not measured on the care they do provide. Private fee-for-service plans, in addition to "Special Needs Plans," were added to the private health plan side of Medicare under the 2003 Medicare overhaul law (PL 108-173), and account for much of the surge in overall MA enrollment since then.

"A number of things are depressing about these results," Hackbarth said. "I think that one of them is that I fear that we are going backwards, that the policy changes that we made in this program are converting Medicare Advantage from a program that's leading edge where we reward organized systems that reduce costs and improve quality ... that we're going to private fee-for-service, that has little potential to do either. These results are just a reflection that we're not evolving, we're devolving."

Commissioner Nancy M. Kane noted that Harvard Pilgrim Health Care, a Massachusetts health plan with a reputation for tightly managing care, has switched its Medicare enrollees into a private fee-for-service plan. That not only means it gets paid more, it also isn't held to the higher quality standards that other Medicare Advantage plans must meet. Many more private fee-for-service plans have applied to enter the Medicare Advantage program next year, and could be highly attractive to Medicare beneficiaries. That's because as in traditional Medicare, they have the ability to choose which doctor or hospital they use—but they also may pay lower copayments and get better benefits.

Commissioners said MedPAC should state more forcefully its position that Medicare Advantage plans should be accountable for the care they provide and that they should be paid based on the quality of their performance. "We want not only reporting, but also performance," said commissioner Nicholas Wolter. "I think we should be very strong on this" in recommendations to Congress and the Medicare program.

The Friday meeting also examined special needs plans, or "SNPs," whose enrollment also is growing fast, whose payments are higher than those received by many MA plans and whose number is rapidly growing. In theory, the plans could significantly improve quality and lower costs by managing much more carefully the treatment received by the most chronically ill Medicare beneficiaries. But SNPs are not subject to requirements to ensure that they offer that type of specialized care, said MedPAC staffer Jennifer Podulka.

Podulka unveiled a package of eight draft recommendations to establish performance measures for the plans and to evaluate their performance within the next three years, among other provisions. MedPAC is scheduled to vote on the recommendations at its meeting in December, in a bid to influence Medicare legislation pending in Congress.

AHIP's Ghose emphasized that the data on quality performance presented at Friday's meeting must be placed in the proper context. It takes time to bring enrollees into managed systems and to improve the quality of their care, he said. As a result, it's hardly surprising that older MA plans would outperform newer ones, he added. But unlike providers in traditional Medicare, managed care plans in the Medicare Advantage program are organized to measure, manage, and improve care, he said. Improvements by Medicare Advantage plans on NCQA quality measures may have slowed because of the influx of new enrollees, according to Ghose, but because of a lack of data on quality of care in traditional Medicare, "we don't know whether people are doing better at all."

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