Medicare Advantage savings aren’t adding up

While there is some back-and-forth debate over the true savings results from Medicare Advantage, the plans could actually cost Medicare and the American taxpayer.

That’s according to Hayden Rooke-Ley, a senior policy analyst at primary care company Aledade, and colleagues, who penned a blog post in Health Affairs this month discussing Medicare programs against taxpayer savings. According the Rooke-Ley et al., “when a beneficiary joins MA, Medicare spends more, on average, than it would have if the patient had remained in traditional Medicare,” they wrote.

However, when patients join accountable care organizations under the Medicare Shared Saving Program, Medicare costs fall, they argued.

Part of this may be because MA plans are given bonuses on top of their regular payments based on performance. Under other payment components, MA spending is between 2% and 5.5% higher than traditional Medicare, according to the authors. Those findings are also close to estimates from MedPAC, which found MA pay 1% to 2% more overall than traditional Medicare.

By comparison, MSSP has no quality bonuses, as ACOs can only share in savings. According to the authors, MSSP-enrolled beneficiaries have savings of $175 each.

The findings come at a time when MA enrollment has exploding, covering roughly one-third of all Medicare beneficiaries.

“Both programs hold the potential to yield better care at lower costs to Medicare, and as they continue to grow, policymakers should focus on providing beneficiaries with a fair choice: MA’s creative benefit designs and narrower networks or traditional Medicare’s open network that generates value through ACOs and other alternative payment models,” Rook-Ley et al. wrote.

With value in mind, the authors presented four solutions: changing the current benchmarking methodology, refining the MA risk adjustment methodology, improving the balance between rewards and penalties, and fixing the rural glitch that penalizes ACOs.

One of the authors of the post, Travis Broome, is on the board of the National Association of Accountable Care Organizations (NAACOs).