MedPAC Commissioners Pan Some Medicare Advantage Plans’ ‘Extra Benefits’

A report detailing flaws with the “extra benefits” Medicare Advantage (MA) plans offer generated passionate debate Thursday during a meeting of the Medicare Payment Advisory Commission (MedPAC), with many commissioners questioning the value of spending $83 billion — $2,500 per MA enrollee — of taxpayer money for them each year.

“Beneficiaries are attracted to these extra benefits, and may join Medicare Advantage because of them, and yet the evidence kind of shows that use of these extra benefits is low,” said commission member Tamara Konetzka, PhD, a professor of public health sciences at the University of Chicago. “There’s vision here, or there’s dental, and then they find that the benefits actually don’t amount to much, or … they have trouble finding providers in their network and using that benefit, or they were kind of mistaken about how important that is relative to the other things, other healthcare they need.”

The MedPAC report the commissioners reviewed was not made public, but snippets were summarized in a 20-page presentation that MedPAC senior analyst Stuart Hammond and research assistant Pamina Mejia narrated. “The data that Medicare collects are insufficient for examining the use of services provided as supplemental benefits, and the lack of reliable data makes it impossible to answer many important questions about how the rebates Medicare pays to MA plans are used,” Hammond told the commissioners.

“We do not know how much plans spend on each type of benefit, which enrollees used each benefit, or whether service use differs by factors such as age, sex, race, disability, status, or geographic area,” and without that, “it is difficult to assess the potential value of the benefits to MA enrollees and the taxpayers who fund the program,” he said. Meanwhile, “the share of the rebates expected to be used to provide these benefits roughly doubled between 2018 and 2024.”

Hammond and Mejia noted that money for these services — which is paid through plan rebates — subsidizes drugs, dental, vision, and hearing services that traditional Medicare does not provide, and which can have quantifiable health benefits that save healthcare dollars in the long run. The rebates also lower cost-sharing for certain MA services, and about 10% of the rebates go to administrative costs and the plans’ profit margins, Hammond said.

Increasingly, however, federal policies allow the rebates to be spent on more day-to-day services, especially for chronically ill populations. They include certain kinds of debit cards, home modifications, transportation, help with utility bills, groceries, and even pest control, which some commissioners acknowledged may not have as much evidence for preventing or curing disease, lengthening life, or saving healthcare dollars. Instead, they seem to be compelling tools to recruit enrollees that make private corporations that run them richer and more powerful, some commissioners noted.

Additionally, several of the commissioners complained that while the MA plans offer these services, it’s difficult for patients choosing a plan to know upfront how much or which services are covered, or whether there are prohibitive spending caps or limitations. Enrollees can’t always know in advance that they can only get an advertised benefit — say, dental care — if they use a specific dental practice, which may not be their long-time dentist, they pointed out.

Stuck in the Plan

Certain benefits are targeted for people with certain health conditions or disease states, said commissioner Gina Upchurch, RPh, MPH, executive director of Senior PharmAssist in Durham, North Carolina, a nonprofit that counsels seniors on drug plans. “Do you know if there’s any effort to make it clear who is available for what ahead of time, before people enroll?” she asked. Patients often learn after they enroll that they aren’t eligible for the benefits that brought them in, “and then they’re stuck in [the plan] and can’t do anything about it.”

Commissioner Stacie Dusetzina, PhD, a health policy professor at Vanderbilt University Medical Center in Nashville Tennessee, expressed deep concerns that plans are getting credit — a check mark for coverage of a service — when they only provide a small component. For example, a plan gets a check mark on the Medicare Plan Finder that it offers hearing services, even if the plan pays just for a hearing evaluation — but nothing for hearing aids themselves or the fitting for them, she said. “That’s kind of ridiculous because there’s a big difference in benefits.”

Dusetzina and several other commissioners argued that the way plan benefits are displayed in their promotions must be fixed, so beneficiaries can shop more dependably.

Commissioners asked whether dental, hearing, or vision services are vertically integrated with other MA plan providers. Hammond said that the plans usually contract with a network of providers. “[To] the extent that it is vertically integrated, I don’t think we have a lot of clear information,” he said.

Commissioner Brian Miller, MD, MPH, associate professor of medicine at Johns Hopkins University in Baltimore and a nonresident fellow at the American Enterprise Institute, applauded the report but noted some parts he felt were “overtly negative” toward MA plans. It was always understood that the idea was that MA enrollees were agreeing to a tradeoff, he said. They give up fee-for-service access to any willing Medicare provider and “almost no utilization review” in exchange for provider networks, and moderate or heavy utilization review, he said. But there’s reduced co-pays and other costs, access to prescription drugs with no need for a separate Part D plan, and all those extra benefits.

Medicare’s Safety Net

“I practice medicine in East Baltimore,” Miller said. “It’s not a very wealthy neighborhood. And you know, a lot of my patients might not have the funding to buy Medigap and a Part D [plan] on top of Part B. So, you know, we should be realistic about how we look at Medicare Advantage. It is functionally the safety net in the Medicare program for the [very] elderly, poor, and minority population.”

Commissioner Greg Poulsen, MBA, a senior vice president at Intermountain Healthcare, an integrated system in Salt Lake City, noted the commissioners’ “exciting” discussion, then summarized major problems with how “extra benefits” have evolved.

“I love HMOs. I love their potential,” he said. “I love Medicare Advantage … the concept of proactive care, the idea of being able to take care of people more effectively, keep them healthier and deliver a better value…, but that’s different than what we are talking about now, unfortunately.”

The rebates were supposed to be a form of shared savings that allowed enrollees and the MA program to benefit from plan efficiencies. Network integration would avoid duplication, take better care of the patient, and save the Medicare trust fund money. That was true, Poulsen said, until about 2008 or 2010. Medicare now spends $80 billion more this year on MA plans than it would spend if the same beneficiaries were in traditional Medicare, an amount that has increased year to year.

Poulsen suggested reworking the program to reward only those programs that actually save money and help the patient, not those that don’t. “Then we’d be able to provide enhanced benefits, not at the expense of the taxpayer, but through efficiencies.”