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Medicare Advantage’s Exponential Growth Spurs Scrutiny

RFI response focuses on a variety of ways to improve beneficiaries’ experience, promote sustainability.

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The recent rapid growth of Medicare Advantage means now nearly 50% of all Medicare beneficiaries are in the program. The sheer numbers served, paired with the speed of the increase, raise important questions about both quality of care and the price tag for beneficiaries and taxpayers.

Medicare Advantage is a critical option for Medicare coverage,” said Mark E. Miller, executive vice president of Arnold Ventures’ health care team. We have an obligation to provide transparency and accountability for patient benefits and care and to spend taxpayer dollars and beneficiary premiums responsibly.”

There are promising signs that patients will benefit. For example, a Medicare Advantage plan can coordinate Medicare and Medicaid coverage for people who are eligible for both programs. Medicare Advantage plans have also demonstrated that they can provide care less expensively than fee‐​for‐​service Medicare, but they get paid more. As a result, Medicare Advantage plans have never produced aggregate savings to the Medicare program. 

Reducing overpayments to Medicare Advantage is critical for improving the fiscal sustainability of the Medicare program and shoring up the Hospital Insurance Trust Fund, which funds nearly half the Medicare Advantage program and is set to be depleted in 2028.

The Centers for Medicare and Medicaid Services (CMS) recently released a Request for Information (RFI) seeking ideas on ways to improve Medicare Advantage, including ways to ensure the program delivers equitable and high-quality care while supporting affordability and sustainability of the Medicare program. The RFI sought input from stakeholders on more than 40 questions, potentially telegraphing both the magnitude of changes needed to strengthen the program and the scope of reforms the Administration may be considering.

Arnold Ventures responded to the RFI, highlighting opportunities to improve the program and strengthen Medicare’s fiscal sustainability. A few key recommendations include: 

  • Reduce overpayments to Medicare Advantage plans. Risk adjustment and the quality bonus payment system are two of the main drivers of overpayments to Medicare Advantage today, and we encourage CMS to take steps to address them. First, we urge CMS to increase the coding intensity adjustment to fully recapture upcoding. Such reforms could reduce Medicare spending by as much as $198 to $355 billion over the next decade (20212030). Second, reform the quality bonus program to reduce inefficient spending and make it more aligned with the budget-neutral quality programs in fee-for-service.
  • Increase transparency and accountability for Medicare Advantage plans. We know less about the care and experiences of beneficiaries in Medicare Advantage relative to those in fee-for-service. As the program grows, it becomes even more imperative that CMS prioritizes strengthening data collection requirements with respect to quality, access, supplemental benefits, and enrollment so that we can assess the quality and value of the program for beneficiaries and taxpayers. 
  • Prioritize improvements to and investments in growing the availability of fully integrated dual-eligible special needs plans (FIDE-SNP) to improve the care in which one of the most complex, costly, and diverse populations receive their health care. The FIDE-SNP is an integrated model that offers an opportunity to align all Medicare and Medicaid benefits, financial incentives, and program administration through a single entity for the population that is eligible for both, the so-called dual-eligible” population. Despite this, fewer than 50% of dual-eligible individuals even have access to an integrated model. CMS should prioritize assisting states with implementing these models and making it easier for people to understand and enroll in these models to help achieve better outcomes for this population with a complex array of needs. 

Read our letter to the CMS administrator below.