Insurers say private Medicare plans are better, but we really don’t know

Introduction

Health insurers have been telling us for years that their Medicare Advantage plans, which are federally funded but privately run alternatives to traditional fee-for-service Medicare, can provide better care—at lower cost—than the government.

One of my priorities when I worked in the industry was to perpetuate that notion. And I believed the PR, so much so that I encouraged my own parents to enroll in a Medicare Advantage plan. But is the PR true? The answer is, we don’t know, and we may never know.

That’s because, as health economist and researcher Austin Frakt pointed out in a commentary last week in The Incidental Economist, neither the federal government nor the insurers that operate Medicare Advantage plans will make the data available to enable apples to apples comparisons.

The lack of data hasn’t stopped the insurance industry from continuing the PR campaign. Whenever the Medicare Advantage program is threatened with a funding cut, the industry makes sure thousands of enrollees in the plans contact their Congressional representatives, and industry executives request opportunities to testify before friendly lawmakers about the superiority of Medicare Advantage plans.

In September 2012, for example, Karen Ignagni, then-CEO of America’s Health Insurance Plans, read a long list of Medicare Advantage’s supposed advantages to members of the House Ways and Means Committee. Many of them were indisputably true. Medicare Advantage plans are able to offer enrollees richer benefits because the federal government has for years overpaid insurers to encourage them to participate in the Medicare Advantage program.

Ignagni told the committee that 78 percent Medicare Advantage plan enrollees are in plans that cap their annual out-of-pocket maximums at $5,000. People enrolled in traditional Medicare often have to pay more, sometimes much more, if they need expensive care.

Ignagni also ticked off a number of additional services and benefits that only Medicare Advantage enrollees receive, such as vision, hearing and dental benefits, case management services, disease management programs and nurse help hotlines.

And she indicated that the care provided through Medicare Advantage plans produces better outcomes because of the ability of the insurers to coordinate care better than traditional Medicare. Medicare Advantage plans’ coordinated care programs “provide for the seamless delivery of health care services across the continuum of care,” she said.

Ignagni’s information was based on various studies that have been conducted over the past several years, some of which have been commissioned (and paid for) by the industry. At the 2012 House committee hearing, for example, Ignagni cited a study concluding that the Medicare Advantage hospital readmission rate was about 13 percent to 20 percent lower than in the Medicare fee-for-service program. She didn’t mention in her testimony that the study was conducted by MedAssurant, Inc. (now known as Inovalon), a company that did data analysis for her trade group.

Frakt has written about studies involving Medicare Advantage plans and cautioned that, while the results can seem compelling, we can’t be certain that enough data was made available to the researchers to give us confidence their findings are reliable.

Last Thursday, Frakt wrote about the most recent study to conclude that Medicare Advantage plans have an edge over traditional Medicare in both quality and efficiency. After analyzing the findings, Frakt found it as lacking in some of the same respects as previous studies.

“Most studies fail to convince one way or the other because researchers are not permitted the same degree of access to MA (Medicare Advantage) data as that for TM (traditional Medicare),” Frakt wrote. “For the latter, full claims over many years are available…For the former, some aggregate measures of utilization provided by plans are usually all we get, and when we get them, they’re not over many years.”

As a consequence, Frakt added, “Comparing MA to TM is like trying to compare two houses, one of which you can live in, the other of which you can only observe through a few keyholes.”

Why only a view through a few keyholes? Because private insurers consider their data proprietary. They refuse to provide enough of it to make the apples to apples comparisons that would settle the ‘which is better’ question once and for all.

As Frakt noted, one would assume that Medicare Advantage plans would do better on quality measures, if not efficiency measures, when you consider they get more money per enrollee from the government than traditional Medicare. Frakt also noted that manipulation of risk scores could be a factor in studies showing MA plans to have an advantage.

One notable finding from the recent study was that MA plans operated on a nonprofit basis do better than those that are operated on a for-profit basis.

Frakt wrote that, “The best way to decide (whether MA plans are better than tradition Medicare) is to do more research with more complete data. But, he added, “Until we’re offered more than selected glimpses through keyholes at MA, we may never get the chance to do that.”