Eric H. Schultz, president and CEO of Fallon Community Health Plan, says restructuring the delivery system will improve quality and lower costs in Medicare:
A new analysis shows that Medicare Advantage is doing exactly what its critics claim it’s not – controlling costs and ensuring quality of care through lower rates of avoidable hospitalizations.
The analysis, authored by Gerard Anderson, PhD, Professor and Director, Center for Hospital Finance and Management, Johns Hopkins University, and commissioned by the Alliance of Community Health Plans (ACHP) offers important, objective evidence in the current debate over funding for the Medicare Advantage program. The analysis compares traditional fee-for-service Medicare to Medicare Advantage in key categories, specifically hospital readmissions, preventable hospital admissions and emergency department visits.
Based on data reported by most of the health plans that are members of ACHP, including Fallon Community Health Plan, Medicare Advantage outperformed traditional Medicare in all categories:
–On average, the hospital readmission rate for the ACHP Medicare Advantage plans was 27 percent lower than the national average for traditional Medicare (FCHP’s rate was 18 percent lower). Hospital readmissions cost Medicare $17.4 billion in 2004.
–The ACHP plans had an average preventable emergency department visit rate that was 86 percent lower than the traditional Medicare national average (FCHP’s rate was 90 percent lower). The average Medicare payment for an emergency department visit is $510.
–On preventable inpatient admissions, the ACHP plans’ average rate was 87 percent lower than traditional Medicare’s national average (FCHP’s rate was 88 percent lower). The average Medicare payment per discharge in 2007 was $8,396.
Medicare Advantage is not a perfect program, and there is serious discussion to cut funding to the program as a way to help pay for health care reform. But this analysis clearly demonstrates the program’s value – to the health care system and to Medicare Advantage enrollees. It also reinforces findings from a recent study by Massachusetts Health Quality Partners that, on certain clinical quality measures, Massachusetts seniors enrolled in a Medicare Advantage plan receive better care than those in traditional fee-for-service plans. Medicare Advantage delivers on its promises: the right care at the right time, additional benefits beyond traditional Medicare, and greater care coordination between health plans and providers that helps enrollees remain as healthy as possible.
The funding Medicare Advantage health plans receive is a real investment in the health of this country’s Medicare beneficiaries and not a “subsidy” or “overpayment,” as it’s been referred to. The report shows that it’s possible to improve quality and lower costs in Medicare if the delivery system is structured differently. Like Fallon Community Health Plan, the regional, community-based health plans that are ACHP members are able to keep more of their Medicare patients out of the hospital and avoid unnecessary costs because they invest in delivering the kind of coordinated, patient-centered medical care that traditional fee-for-service Medicare – in its current state – cannot consistently provide.
ACHP, a Washington-based membership organization of non-profit, community-based and regional health plans and provider organizations from across the country, commissioned the analysis in response to issues raised by the Administration and Congress that hospitalization rates are too high and lack of coordination is the cause. ACHP is hoping that Congress will use the report as a guide for writing health care reform legislation and also for finding ways to work in partnership with all stakeholders in the debate.
President Obama and Health and Human Services Secretary Kathleen Sebelius have both said publicly that there are no plans to cut Medicare benefits. But a decision to cut funding to the Medicare Advantage program means that, ultimately, Medicare beneficiaries’ benefits will be cut. If funding cuts are made, Medicare Advantage enrollees will be faced with higher premiums and/or reduced benefits. Since many of these enrollees are on fixed incomes (according to statistics from the Henry J. Kaiser Family Foundation), any adjustments to their Social Security and/or pension benefits will be insufficient to cover their increased health care expenses.
Funding cuts also will have an impact here at home. A decrease in funding will seriously erode a program that approximately 190,000 Medicare Advantage enrollees in Massachusetts (about 20% of all residents on Medicare) have come to rely on.
Nationally and locally, Medicare Advantage is already achieving key objectives of health care reform by improving care quality and lowering costs. It’s a program that’s already proven itself to be part of the solution.
I hope the findings will have an impact on the Presidents decision for senior health plans. Medicare Advante is helping millions of seniors that cant afford to pay for health insurance.
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I think this is an excellent example of Value Driven Healthcare.
Evan
@epiStoic
If Mr. Schultz thinks “Medicare Advantage is Part of the Solution,” then he does not understand the problem.
There are now over 7,000 different Medicare Advantage plans being marketed to American senior citizens. The result: In place of Medicare’s tiny 3% – 4% administrative costs, Medicare Advantage has introduced massive waste, inefficiency, and profiteering into the health care system. The government pays on average 13 percent more to care for a Medicare Advantage enrollee than it would if that person were in traditional Medicare.
As important, Medicare Advantage has produced widespread confusion among its elderly enrollees, who often are deceived by the the privatized Medicare Advantage agent that pressured them into signing up:
“A 2008 Government Accountability Office report report found wide differences in enrollee costs depending on the plan, including home health service costs that could be up to 84 percent more than traditional Medicare.
“ ‘The plans tell them they have the same coverage,‘ said Delores Bowman, who handles calls to the Medicare Rights Center, ‘and they don’t.‘ ”
As Donald McCann, M.D., recently wrote:
“What have we learned? The private [Medicare Advantage] plans take away the choice of health care providers that the traditional [Medicare] public program offers.
“The private plans insert intrusive interventions between the patient and the physician – interventions that are not found in the public plans.
“Private plans divert more resources to excessive, wasteful administrative services while increasing the administrative burden on the health care providers and on the public stewards who must provide oversight of our tax dollars that are diverted to this industry.
“Private plans also provide more entry points for the criminal element to cheat the taxpayers, patients, and providers.
“And for this we are paying far more of our tax dollars than we do in the traditional Medicare program for comparable levels of care. The obvious lesson is that we should dump the private plans.”
Until 1970 Canada had a health are system identical to ours, dominated by private insurers. That year Canada switched to a single payer, Medicare For All system. Now, after nearly 40 years a valid comparison of Medicare for all vs. the U.S. private model can be made. Result: Canada now surpasses the United States in every significant health care metric: longevity, infant mortality, and on and on.
Rather than continuing to attack the foundations of Medicare through the wildly wasteful and inefficient privatized Medicare Advantage program. Medicare Advantage itself should e eliminated. In its place the president and Congress should expand Medicare For All through a single payer system.
Medicare Advantage is for-profit health care. You’re not fooling anybody.
I see the fruits of the Medicare Advantage plans every day. I meet with countless individuals who, before enrolling in a Medicare Advantage plan, simply would not go to the doctors or receive tests they needed because they could not afford them. Yes, private insurance companies are profit driven. That is what creates efficiency. If the bottom line doesn’t matter,the product won’t either. People who think that Medicare Advantage plans should go away, should speak to countless seniors who have benefited from these plans and now can receive the care they need and deserve!
Re: Cathy’s comment:
If we wanted to design an insurance regime that would care for the fewest seniors at the greatest cost, at the same time the most money possible was being sucked out of it to private shareholders’ bank accounts, then Medicare Advantage would be that system.
Not only does care through a privatized Medicare Advantage plan cost more than identical care provided through Medicare, but Medicare Advantage plans have been creaming off the healthiest, wealthiest seniors from the public Medicare system. They obviously see no profit in covering sick seniors, who cost them too much money.
The moment those healthy, wealthy seniors are neither, they discover the strict limits of their privatized M.A. plans, and must switch back to public Medicare.
The result of all this is that the M.A. plans work well for two groups only: (1) a tiny handful of healthy, wealthy seniors, and (2) M.A. provider firm shareholders . For everybody else — and this includes taxpayers — private Medicare Advantage plans are no bargain. They badly undercut the viability of Medicare without adequately substituting for it.
On a societal level, the health outcomes of favoring private profit over public health are grim. For the past 40 years we have been living through a side-by-side comparison of a single payer, Medicare For All system (Canada), with a multiple private insurer-dominated system (United States).
Health insurance systems and health outcomes were virtually identical up to 1970. That year Canada adopted a single payer, Medicare For All system. Canada now surpasses America in every significant health acre metric, most notably (for this discussion) longevity.
A picture (this graph) is worth a thousand words. Please note that seniors in Canada who are not subject to the harsh vagaries of privatized Medicare, now live about four years longer than U.S. senior citizens.
In fact, the Voice Of America recently reported that life expectancy in the U.S. has started to decrease. We are the first generation of Americans that will not live as long as our parents.
The solution to America’s health care crisis is not to expand Medicare Advantage, but rather to eliminate it in favor of a single payer, Medicare For All System.
In response to Cathy’s comments regarding seniors not having access to good care. These are the same patients who have traditional Medicare, of course they have access to good care. They probably have access to more providers than what an HMO/PPO Senior plan would offer. Your comments do not make sense.
Additonally, the CBO and Medpac have both come out and said that these Senior plans are costing more than tradtional Medicare plans and for the same services. The CBO says its costing the goverment 54.0M over a 5 year period. Medpac states similiar savings as well. Is anyone surprised that these insurance companies could cut themselves this great deal with a bought out congress? It has been written in the current healthcare reform proposals to eliminate these disparities. This should have happened a long time ago. Mr Schultz, I suppose it would easier for you to increase premiums to seniors rather than for you take a pay cut from your multi-million dollar salary. Shame on you.
Am I missing something here? In return for the Medicare premium amount and the 14% government subsidy, seniors claims are paid by the Medicare Advantage plan. Does that not save Medicare money? In addition, Medicare only pays 80% of claims after a fiarly large deductible, so most seniors with traditional Medicare are also buying supplemental insurance to fill in the gaps, and those policies cost anywhere from $100 to $200 or so per month. I am no Medicare Advantage fan, but what are a very large number of seniors supposed to do without it?