Via Peter Krantz:
Because they may reduce traditional Medicare (TM) spending, Medicare Advantage (MA) plans may not be, on net, as costly as we think. In my latest AcademyHealth post I summarize all the studies of this subject I’m aware of.
You probably chafe a bit every time you learn that a certain doctor or hospital isn’t part of your insurance network. Narrowing the scope of your network helps insurers save money. They can drive hard bargains with doctors and hospitals to get lower prices and walk away from higher-priced ones.
Increasingly, insurers are offering narrow network plans. Would you enroll in one? So long as quality doesn’t suffer, consumers should welcome the lower premiums they may offer.
Researchers at the Leonard Davis Institute at Penn analyzed the relationship between network size and premiums for plans offered in the Affordable Care Act marketplaces. Plans with very narrow networks (covering care by less than 10 percent of physicians) charged 6.7 percent lower premiums than plans with much broader networks (covering care by up to 60 percent of physicians). This translates into an annual savings for an individual of between $212 and $339, depending on age and family size. For a young family of four, the savings could reach nearly $700 per year.
“Marketplace consumers are looking for value,” said Daniel Polsky, the University of Pennsylvania health economist who led the study. “That level of savings could be a very good deal for consumers, but whether these plans provide value depends on how they are achieving those savings.”
One way plans might save money could make it harder for patients to get care — so that they get less of it. Narrow network plans may do this if they don’t cover enough nearby providers, with the ones they do cover too busy to take new patients in a timely fashion. Clearly this would be especially problematic if appointments with one’s preferred primary care doctor are hard to obtain.
Are today’s narrow network plans actually doing this? Until recently, we had no data to answer this question. But two studies published earlier this year — one focused on Massachusetts, the other on California — provide some insight.
In 2012, the Massachusetts Group Insurance Commission, which provides health insurance to a lot of government employees in the state, offered most of them the chance to waive three months of employee premium contributions if they enrolled in new, narrow network plans. This premium holiday amounted to an average of $500 in savings to an enrollee. The new plans covered about half as many physicians and one-third fewer hospitals than prior, broad network plans.
The deal was offered to the 100,000 or so state employees and their dependents, but not to the nearly 20,000 enrollees who are state municipality employees. That created the natural experiment we economists love. By comparing the experiences of the two groups, the economists Jonathan Gruber and Robin McKnight teased out the effect of narrow network plans on the 10 percent of enrollees induced by the premium holiday to enroll in one.
Switchers spent a whopping 36 percent less on health care. Some of these savings can be attributed to narrow network enrollees who saw expensive specialists less. This could be because healthier enrollees who require fewer specialists were more attracted to the plans.
But savings were not entirely driven by healthier people who switched to the plans. They were also achieved by more efficient use of the health system. Narrow network enrollees used the emergency department less, particularly for conditions treatable in office settings. The per-visit cost of outpatient care also fell for narrow network enrollees, which would be expected if the plans paid lower prices. The authors did not find evidence that patients in narrow network plans used lower-quality hospitals, consistent with other work that suggests networks can be narrowed without sacrificing quality.
The savings were concentrated among enrollees who retained their primary care physician as they switched plans. And the distance that narrow network enrollees traveled for primary care visits — but not for specialists — fell. This suggests that plans that narrow their networks of costly specialists but maintain or increase their network of primary care doctors are on the right track. Not only can primary care doctors help patients select specialists and hospitals — and advise them when they’re necessary at all — but retaining primary care physician relationships is also important to many patients.
That’s why the results of a recent study of new plans offered in California are especially troubling. Simon Haeder, a West Virginia University political scientist, and colleagues at the University of Wisconsin-Madison and the University of California, Irvine, found that access to primary care physicians was relatively poor for a sample of plans offered through California’s Affordable Care Act Marketplace in 2015. Most Obamacare marketplace plans in California, as well as in other states, are narrow network plans.
Using a “secret shopper” approach, the study found that only about 30 percent of attempts for appointments with specific primary care doctors were successful. In this approach, an individual pretending to be a patient seeking an appointment called the offices of over 700 primary care doctors listed in marketplace plan directories.
In about 15 percent of cases, the doctor did not accept the caller’s plan, despite being listed in its directory. In nearly 20 percent of cases, the directory included the wrong phone number or the number was busy in two calls on consecutive days. Ten percent of doctors called were not accepting new patients. And about 30 percent of doctors called were not primary care physicians, despite being listed as such in the directory.
When callers were able to make an appointment, the average waiting time for a physical exam was about three weeks. In cases for which the caller pretended to have acute symptoms, the average time until an appointment was about one and a half weeks.
“If patients struggle to obtain primary care appointments, narrow network plans may have a rocky future,” Mr. Haeder said. Consumers revolted against managed care in the 1990s, he notes, and they could very well revolt against poorly managed and loosely regulated narrow networks.
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Pointing out that there could be an innovation–access tradeoff is often too simplistic, however. Some policy proposals on drug pricing that would broaden access might also stifle innovation, but others would change incentives for the type of innovation the pharmaceutical industry invests in—an innovation–innovation tradeoff. The aim of these approaches is not necessarily to change the rate of innovation but to change its composition, which would reduce some types of innovation we have now and encourage other types that would yield greater social value.
That’s from a new Annals of Internal Medicine commentary by Rachel Sachs and me. It’s technically gated, but the desktop site shows the first page, which happens to include the entire text, lacking only affiliations, disclaimer, disclosures (none), references, and the like.
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What is this post about? Look here.
The public option debate, in hibernation since a public option was removed from health reform legislation in 2009, has reawakened. In July, Hillary Clinton and the Democratic party endorsed the idea of a launching a government-run plan to exert competitive pressure on private ones in Affordable Care Act (ACA) Marketplaces. A nearly identical scheme exists in Medicare — with a little-known twist that may be the key to getting most of the public option’s benefits, with fewer of its political risks.
Read the rest in my latest post on the JAMA Forum.
The following originally appeared on The Upshot (copyright 2016, The New York Times Company).
A growing proportion of Medicare beneficiaries are opting out of the government-run insurance program. They are instead choosing a private plan alternative, one of the Medicare Advantage plans. The strength of this trend defies predictions from the Congressional Budget Office, and nobody can fully explain it.
Pinning down explanations for these two mysteries is important. Doing so could help us understand the structure and cost of Medicare in the future.
The mysteries may be connected by something that appears, at first, to be unrelated: Doctors and hospitals tend to treat insured patients the same way, regardless of what kind of coverage they have. A traditional Medicare patient admitted to the hospital with, say, pneumonia will receive the same standard of care as a similar but privately insured pneumonia patient.
From this, an idea emerges that links the two mysteries. As enrollment in Medicare Advantage plans grows, so too do the plans’ influence over how doctors and hospitals provide care. Unlike the traditional program, Medicare Advantage plans establish networks, covering care provided only by certain doctors and specific hospitals. Often those are the ones with lower cost growth. As doctors and hospitals reduce their cost growth to gain access to Medicare Advantage networks and the increasing number of patients enrolled in the plans, they do so for traditional Medicare patients as well.
So, as Medicare Advantage enrollment swells, the growth in the cost of care for traditional Medicare falls — a spillover effect. That’s the theory, anyway. Does it hold water?
A few studies have examined the question, and all support the spillover theory. The first study, examining the period from 1994 through 2001, found that when the proportion of Medicare beneficiaries enrolled in Medicare H.M.O.s grew by an additional percentage point, per enrollee spending in traditional Medicare fell by one percentage point. Another study, focused on the period from 1999 to 2009, found that a 10-percentage-point increase in Medicare Advantage market share was associated with a 4.5 percent decrease in per enrollee traditional Medicare hospital costs and a commensurate reduction in duration of hospital stays.
“These studies extend on a body of research that demonstrates that health care markets are connected,” said Michael Chernew, a Harvard health economist who participated in both studies. For example, research in the 1990s showed that when H.M.O.s grab enough of a health care market, Medicare spending is reduced.
A study published this year by Kevin Callison, an economist at Grand Valley State University, corroborates the phenomenon. It found that greater Medicare Advantage market penetration is associated with reduced hospital costs for traditional Medicare heart attack patients. But such patients were also more likely to die, a finding at odds with other work by Mr. Chernew and researchers at Harvard and Stanford that showed that the expansion of Medicare Advantage is associated with lower mortality.
Those studies examined periods that predate the Affordable Care Act, which changed how Medicare pays plans and hospitals. Since then, Medicare spending has continued to decelerate, and Medicare Advantage enrollment has continued to grow. So it’s important to look at more recent data to see if the spillover could still be connecting the two phenomena. Two studies published in the last year have done so, and they support previous findings.
A study spanning the 2010 passage of the A.C.A. by Katherine Baicker and Jacob Robbins, health economists at Harvard, found that a 10-percentage-point increase in Medicare Advantage market penetration was associated with a 7.3 percent decline in days that traditional Medicare patients spent in the hospital. Instead, patients receive more care in less expensive settings: Outpatient visits increased 5.5 percent, for example. In total, annual per enrollee traditional Medicare costs were lower by $252 for each 10-percentage-point gain in Medicare Advantage market share.
Finally, a study published last month by researchers with the Harvard T.H. Chan School of Public Health provided the most up-to-date look, using data through 2014. It found that in counties with Medicare Advantage market penetration above 17.2 percent, greater growth in Medicare Advantage was associated with slower growth in traditional Medicare spending. According to the study, the spillover effect accounts for 11 percent of the recent traditional Medicare spending slowdown. Because of the methods used, this may be a conservative estimate — the spillover effect could be even larger, explaining more of the slowdown.
If Medicare Advantage is responsible for slower traditional Medicare spending growth, should policy makers do more to encourage greater Medicare Advantage enrollment? One way to do so would be to coax more plans into the market by paying them more, which is controversial. “There’s almost continuous policy debate about how much we should pay Medicare Advantage plans,” Mr. Chernew said. “In addressing that, we should consider the full impact of Medicare Advantage, not just impact on those who choose to enroll in the program.”
We still don’t know exactly why Medicare Advantage is growing in popularity or why Medicare spending is slowing. But now we know that the two are related. Medicare Advantage growth doesn’t completely explain slower Medicare spending growth, but it is one piece of the puzzle.