Driven by a seemingly ever-expanding list of potential and innovative benefits such as at-home meal delivery and home-air cleaning, Medicare Advantage plans are pointing the way to a more consumer-centric approach to health insurance that could become a blueprint for the rest of the industry.
The U.S. Centers for Medicare and Medicaid Services (CMS) has thrown its weight behind Medicare Advantage (MA), recently announcing a wider array of plan choices and potential benefit options for MA plans. Such consumer-friendly policies are expected to fuel continued strong growth in MA plans into the future.
Between 2004 and 2017, the number of beneficiaries enrolled in MA plans more than tripled to 19 million, growing from 13% to 33% of all Medicare beneficiaries. MA plans are expected to continue growing to cover more than 36% of beneficiaries by the end of this year, according to CMS.
In addition to expansive supplemental benefits that cater to the needs of defined groups of patients such as those with asthma or diabetes, successful MA plans have prospered due to a focus on delivering strong economic value and embracing technology to increase the convenience of care delivery.
Further, the economic model that CMS has established for MA plans has led to a higher level of consumer-centricity by incentivizing the adoption of new modes of cost-effective care delivery. MA plans are able to reap the rewards of more-effective total population management by keeping members healthy with coordinated, proactive care that minimizes unnecessary medical services. Moreover, meeting and exceeding CMS’ Star Ratings quality requirements enables plans to reinvest in better benefits and grow their membership.
Key consumer-friendly MA characteristics driving healthcare change
Consider the following three key consumer-friendly characteristics of MA plans that, if applied more widely, could eventually set the standard for health insurance across the country:
Emphasis on economic value: MA average monthly premiums have declined for three consecutive years, with 2019 average premiums falling 8% to $28, according to CMS. Nearly 83% of Medicare Advantage enrollees remaining in their current plan have the same or lower premiums in 2019.
Certainly, this declining cost trend has appealed to budget-conscious seniors, but so has the certainty that MA plans provide. Since 2011, all MA plans have been required to limit beneficiaries’ out-of-pocket spending for services covered under Medicare Parts A and B to no more than $6,700. Out-of-pocket limits such as these are much closer to the true definition of the term “insurance” than what most consumers have previously experienced.
Personalized, novel benefits: With greater choice comes greater flexibility for MA plans to develop more creative benefits than traditional fee-for-service plans. Many people may be familiar with MA plans’ ability to offer vision and dental coverage, but the latest round of benefits approved by CMS go far beyond those options. As a result, MA plans have the opportunity to directly address social determinants of health, a group of factors that have drawn greater scrutiny in recent years as a major contributor to health outcomes.
For example, for seniors who have difficulty with food security and non-emergency transportation, MA plans may one day offer unique benefits such as home delivery of meals and service from ride-sharing companies like Uber and Lyft. For patients who have chronic pulmonary obstructive disorder and live in hot climates, MA plans could potentially underwrite benefits to provide air conditioners. The ability to personalize benefits to many different groups of patients who are experiencing many different health issues will help MA plans continue to lead innovation in the health insurance industry.
Emphasis on technology to boost convenience: It’s long been understood that technology – when deployed in a thoughtful manner – holds the potential to lower health costs and increase convenience for consumers. MA plans are today at the forefront of technology investment to improve care delivery for seniors, due in large part to their financial incentives to control costs and the freedom afforded by CMS to experiment with different solutions.
Through innovative new population health strategies, MA plans are exploring new ways to keep people healthy – and ideally away from high-cost healthcare settings. For example, many MA plans have invested heavily in predictive analytics to target interventions for patients who are likely to incur increasing utilization and costs as their illnesses progress. MA benefits may cover connected devices, such as a heart monitor that sends a congestive heart failure patient’s vital signs to his cardiologist, or telehealth services for seniors in remote areas. A number of new MA plans, particularly those backed by venture capital, are positioning themselves as innovators employing technology to solve age-old health problems in smarter, more affordable ways.
A hub of health insurance innovation
In the coming years, expect MA plans to continue to leverage CMS’ flexibility to develop newer, more innovative models of care delivery. With increased enrollment in MA, seniors are sending a message to CMS that they, too, are interested in moving beyond the old model of sick care to a more consumer-centric, cost-effective health system that delivers care when and where they prefer.
As Americans grow increasingly frustrated with high deductibles and fragmented care, MA plans offer a light at the end of the tunnel representing a more personalized, consumer-friendly healthcare experience. No doubt health insurers across the spectrum are taking notice.