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Hospital, health system and community leaders know that Medicare is the single largest payer and the single largest cash flow in American healthcare. What many leaders may not know is that as a growing number of people are enrolling in Medicare Advantage plans—channeling a significant portion of that money away from purely fee-based purchases of care and into capitation to buy care by the package, not by the piece—the people most likely to enroll in that program are our low-income Medicare beneficiaries.
And too many leaders do not realize that this changing landscape is functionally helping the healthcare system and our communities respond to some of the social factors that have long led to inequities in care. The payment and approach under Medicare Advantage, especially through Special Needs Plans that enroll people who are eligible for both Medicare and Medicaid, means that large numbers of low-income people are now getting better coverage, better data support and better care options.
The movement of those beneficiaries away from fee-for-service Medicare is particularly relevant and important for the people with the highest needs in both Medicare and Medicaid. Almost 4 million dual-eligibles are now enrolled in the Special Needs Plans. The plans have more extensive benefits that include in-home focused team care and also typically provide vision, hearing and dental benefits as well as linked prescription drug coverage—at lower cost to enrollees.
The contrasts between the two payment approaches are stark and obvious. Traditional fee-for-service Medicare lacks robust quality measurements, quality goals, quality alignments and often pays providers more when the care is less successful and when it doesn’t prevent or reduce patient complications, emergencies and crises.
There is a fairly large set of members in traditional Medicare with higher income levels and with a history of linked and trusted caregivers who will likely remain in fee-for-service Medicare for a very long time, even though the average out-of-pocket cost for the enrollees in that program now exceeds $5,000 per year.
Meanwhile, more than 2 out of 3 of the lowest-income Medicare members have now joined Advantage plans. And we have reached the point where more than half of the African-American Medicare patients have joined the plans and where almost two-thirds of the Hispanic Medicare beneficiaries are in the plans.
Lower-income enrollees disproportionately join Medicare Advantage and then tend to stay with the plans because they are less expensive and are the members are highly satisfied with their care teams. Many of these enrollees are receiving patient-focused team care for the first time in their lives.
The plans also end up with lower use of emergency departments and lower hospital admission rates for some of the chronic conditions that lend themselves to proactive best practices of care. Both the African-American and Hispanic populations have significantly higher numbers of patients with those chronic conditions.
When the median net worth of white Medicare enrollees exceeds $100,000 and the median for Hispanic Medicare Advantage enrollees is currently under $14,000, the fact that these plans have lower out-of-pocket costs and offer more generous benefits makes it clear why they are making the switch in large numbers.
It’s also clear that the Special Needs Plans—by serving dual-eligibles who often have been getting inadequate and uncoordinated care for a long time—are actually providing targeted services to the people most vulnerable to the social determinants of health. In a way, that might be more effective than anything else that we are doing in our various settings and in our society overall to help those beneficiaries.
Increased enrollment by those patient populations was also well timed for the pandemic, because these low-income members had care teams immediately in place to help guide them at multiple levels.
We should make that major difference in pandemic response a key part of our analysis of the Medicare program.
We clearly need a full, information-rich policy debate to discuss directly, openly and very explicitly how to functionally get the best and most effective value from each dollar we spend to fund Medicare.
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