AcuPartD

Keeping you updated on the latest Medicare and Part D news


Leave a comment

High-Cost Patients Tend to Leave Medicare Advantage Plans for Traditional Medicare Plans

A recent study suggests that the ability of Medicare Advantage plans to serve high-cost patients with complex care needs, who account for a dis-proportionally large share of medical spending in the United States, is limited.  The study looks at switching rates of Medicare beneficiaries from Medicare Advantage plans to traditional Medicare plans and vice-versa from 2010-2011.  17% of long-term nursing home patients with a Medicare Advantage plan switched to a traditional Medicare plan, while only 3% switched in the opposite direction during the same time period.  The discrepancy was smaller for short term nursing home patients (9% vs. 4%).

Switching from Medicare Advantage plans to traditional plans is a form of adverse selection, whereby high-cost patients are moving away from the privately-insured Medicare Advantage plans and back into traditional Medicare plans, which can cost taxpayers more.  Private insurers are incentivized to find ways of encouraging high-cost beneficiaries to disenroll from Medicare Advantage plans once their health care costs become too high, due to the monthly fee set for each patient that is provided by the government to private insurers.  If a beneficiary exceeds the expected cost that is covered by the government, the private insurers bear the additional cost.  CMS says it has been looking into the issue and the lead-author of the study, Momotazur Rahman, suggests that plans should be penalized when patients make the switch back to traditional Medicare plans because of high medical costs.

Article
Study

Advertisements