Medicare Advantage plans have long touted lower costs and better care for beneficiaries. But a new Kaiser Family Foundation study indicates seniors who are flipping to private plans already used fewer services.
Seniors enrolled in MA on average cost the government $1,250 less in the year before they switched to a private plan compared to those who remained in traditional Medicare and used fewer services. This indicates CMS is overpaying advantage plans by billions, the report authors said.
“It could add up to a substantial amount of money,” Gretchen Jacobson, associate director of Kaiser’s Program on Medicare Policy and co-author of the report, told CNN.
The analysis compared beneficiaries who switched to an MA plan in 2016 to those who had remained on traditional Medicare. For beneficiaries living in nursing homes who moved to MA plans, the government spent on average $1,825 less that year per beneficiary than it did on residents who stayed.
“If higher-cost nursing home residents are remaining in traditional Medicare while lower-cost residents are moving to Medicare Advantage plans, it could make it easier for Medicare Advantage plans serving the nursing home population to be profitable, which may explain the relatively recent increase in firms offering Special Needs Plans for this population,” KFF noted.
Among its recommendations was adjusting payments to reflect MA enrollees’ prior use of healthcare services. This could reduce Medicare Part B premiums and deductibles for all beneficiaries, the authors wrote.
