Medicare Advantage needs fixing. Here are 3 feasible repairs

Medicare Advantage, after a nearly 20-year run of increasing enrollment, may be hitting a rough patch. Insurers are dropping dozens of plans and exiting markets. The rate at which enrollment has increased is tapering off. Plans have come under scrutiny for upcoding, and brokers, for steering beneficiaries to plans that are not in the beneficiaries’ best interest. Medicare Advantage still has plenty of boosters, but there are now dozens of proposals about how to reform the program to rein in what many see as its shortcomings.

In the October issue of Health Affairs that came off embargo today, Dmitry Khodyakov, Ph.D., a senior sociologist at Rand and a professor of policy analysis at the Rand School of Public Policy, and his colleagues reported the results of a Delphi process that identified three reform proposals that the researchers said were more likely to happen because they benefit beneficiaries without harming the interests of the government or the Medicare Advantage plans: standardizing supplemental benefits, limiting the number of plans an insurer can market and reforming broker commissions.

The researchers acknowledge, though, that those three proposals are incremental changes and not the sort of reform needed to slow down MA spending, a major concern because of Medicare’s precarious finances. To rein in spending on Medicare Advantage, they write, will require more fundamental changes, such as competitive bidding by the plans and risk-score reforms.

Khodyakov and his colleagues also say something about “meaningful cost savings” that insurers probably won’t want to hear: that achieving cost savings will require plan revenue reductions and “potential market disruption.”

“Such disruption, however, may drive innovation that boosts competition among plans and with traditional Medicare through more competitive benefits and higher-quality care,” they write.

Rating winners and losers

The Delphi process, or method, was developed by RAND in the 1950s to summarize experts’ forecasts about the effect of technology on warfare. In rough terms, the process is asking experts on a topic for their opinions over multiple rounds. They see how their answers stacked up against their fellow experts. The notion is that a structured questionnaire, iteration and knowledge of other experts’ opinions will narrow opinions down to a consensus on a subject with a wide range of opinions.

This study was designed to identify expert opinion about how much three parties could stand to lose or gain if policy proposals came to be. The three parties were those who stood the most to gain and lose: beneficiaries, the government and the Medicare Advantage plans themselves. Gauging who the winners and losers of a policy might be provides some insight into the likelihood of a policy weathering policy and political battles and becoming a reality. A proposal that benefits all three stands a better chance of enactment that one that benefits none or just one of the stakeholders.

To conduct their study, Khodyakov and his colleagues asked the experts to rate 14 policy ideas on how they affect beneficiaries, the federal government and insurers on a nine-point Likert scale, with 1 being a large negative impact and 9 being a positive impact with gradations in between. For the second round, the researchers asked the experts to rerate the impact of the policy ideas after reviewing the results of the first round, including a comparison of their answers to the other experts. The RAND researchers used ChatGPT (model GPT-4 temperature 0.5) to analyze experts’ comments that elaborated on their rating. They recruited the expert by identifying authors of recent Medicare Advantage articles, contacting industry and patient groups, and using their own network of contacts. They started with a set of 52 experts but ended up with 39 who participated in the first round of their Delphi process and 37 in the second.

The experts agree on who gained and lost from the 15 proposals they considered, but in the opinion of the experts as sorted out by the Delphi process, none of the policy proposals benefited more than one of three stakeholders.

According to these experts, six of the 15 proposals would have a positive impact on beneficiaries, three would benefit the government and one, the health plans. Five would not benefit any of those, in the opinion of the experts.

Here is a list of the policy proposals and which of the stakeholders they would benefit.

Policy ideas with a positive impact on beneficiaries

• Increase competition between traditional Medicare and Medicare Advantage
• Utilization management standards
• Standardize supplemental benefits
• Reform agent commissions
• Limit the number of Medicare Advantage plans
• Enforce network standards

Policy ideas with a positive impact on the federal government

• Competitive bidding for Medicare Advanrage
• Decouple risk scores from fee-for-service spending
• Revise MA benchmarks methodology

Policy ideas with positive impact on plans

• Default MA enrollment

Policy ideas without positive impact on any stakeholder group

• Regulate Me rebate use
• Multiyear MA contracts
• Decouple Star ratings from Medicare Advantage rebates
• Behavior-based premiums
• End Medicare Advantage rebates

With no proposal having a positive on more than one group, Khodyakov and his colleagues identified those that benefit beneficiaries but don’t harm the government or plans as having the best near-term chance of being adopted. They quote one expert as commenting that limiting the number of Medicare Advantage plans and broker commission reform would be “hugely beneficial to beneficiaries who are overwhelmed by choice, misinformation and malign behavior on the part of brokers.”

The three policies benefiting the government — competitive bidding, disconnecting risk scores from fee-for-service spending and revising the Medicare Advantage benchmarks methodology (the complicated system that CMS uses to set the per capita amounts paid to Medicare Advantage plans) — would generate savings and simplify administration of the program, the experts agree. But the experts also said the plans would likely reduce benefits and increase premiums in response.

The one policy that the experts agree would have a positive impact on plans was setting enrollment into Medicare Advantage as the default choice for beneficiaries. It would increase enrollment, lower marketing costs and likely result in a younger, healthier cohort of enrollees. But the experts said setting Medicare Advantage as the default choice undermines beneficiary choice and likely increases government overpayment to Medicare Advantage plans.