KFF Finds Spending Higher When MA Enrollees Return To Traditional Medicare
A new analysis from Kaiser Family Foundation (KFF) finds higher Medicare spending among those who switch from Medicare Advantage (MA) to traditional Medicare as compared with similar beneficiaries who were in traditional Medicare all along.
KFF says Medicare spent an average of 27% more on those switching in, after adjusting for differences in health status and other characteristics. This amounts to a difference of $2,585 in Medicare spending per person, on average, between the two groups in 2022.
The difference in spending among people with certain health conditions varied from 15% for those with pneumonia to 34% for people with diabetes.
The causes for the higher spending are as follows: skilled nursing facility spending (34%), outpatient hospital spending (23%), and inpatient hospital spending (20%).
Differences in spending were greater for people of color and dual eligibles and increased with age.
KFF asks several questions on the reasons why spending is higher:
- Were switchers unable to get the medical care they felt they needed while enrolled in MA?
- Would more MA enrollees make the switch if people with pre-existing conditions did not face barriers to purchasing Medicare supplemental insurance?
- Do the disenrollments reduce costs and increase profits for MA plans?
- Does the current MA payment system adequately account for adverse selection into traditional Medicare?
KFF notes that previous KFF and MedPAC, the congressional policy arm, analyses found that people who enroll in MA have lower Medicare spending in the years before they enroll than similar people who remain in traditional Medicare, even after controlling for health status.
I don’t discount that some of the increased costs could come from higher needs of individuals and the potential to receive the care they think they need. But I would also argue that KFF has not covered the fact that MA is more efficient and seems to assume that all the increased spending is in the traditional program is absolutely justified.
Utilization management in MA is not a bad thing. As an example, the highest increased cost area is skilled nursing facility (SNF) care post acute stays. But there is every reason to believe that providers in traditional Medicare are doling out orders for SNF stays without really determining if lower costs of care could serve members just as well. The same holds true for even more expensive inpatient stays.
MA plans’ rate of inpatient (IP) stays and SNF stays has been markedly less. With a 2024 prior authorization change, MA IP and SNF stay costs will likely increase over time as the Centers for Medicare and Medicaid Services (CMS) have told MA plans to abide by the traditional program rules.
In essence, they took the managed care out of managed care. While KFF is largley balanced, it shows some of its anti-MA and big healthcare bias here. This is sure to be used on Capitol Hill and the industry has to be ready to push back.
Press release: https://www.kff.org/medicare/press-release/medicare-spent-an-average-of-27-more-on-people-who-switched-from-medicare-advantage-to-traditional-medicare-compared-to-those-who-were-only-in-traditional-medicare/
#kff #medicareadvantage #medicare #priorauthorization #coverage
https://www.kff.org/medicare/issue-brief/medicare-spending-was-27-percent-more-for-people-who-disenrolled-from-medicare-advantage-than-for-similar-people-in-traditional-medicare/