4 Positive Trends That Continue to Define Medicare Advantage Plans

January 18, 2021 - Four trends have continued to define the Medicare Advantage space in recent years, fact sheets from the Alliance of Community Health Plans (ACHP) revealed.

“Congress created Medicare Advantage (MA) in 2003 to provide America’s seniors a convenient, coordinated option for their health coverage and to drive greater value and accountability in the Medicare program,” an ACHP fact sheet began. “Today, the evidence is clear: MA is working, providing exceptional coverage and care for nearly 23 million seniors.”

Four fact sheets from ACHP revealed how diversity, lower out-of-pocket healthcare spending, high quality of care, and strong enrollment growth have continued to characterize Medicare Advantage plans.

Diverse member population

Medicare Advantage plans continue to serve a diverse member population, compared to traditional Medicare.

The Medicare Advantage population included around 25 million seniors in 2020. Of those, over 60 percent were women.

READ MORE: How Non-Profit Medicare Advantage Plans Can Improve Growth

Research from previous years also demonstrated that minority communities have been strongly represented in the Medicare Advantage member population.

Around half of all Hispanic American seniors (52 percent) and African American seniors (49 percent) chose Medicare Advantage over Medicare when they became eligible. Over a third of all Asian Americans selected Medicare Advantage plans (35 percent).

The percentage of Medicare Advantage enrollees who are people of color has increased over time. From 2013 to 2018, the share of enrollees who were people of color grew by more than 37 percent.

Slightly over half of all seniors in Medicare Advantage plans made less than $30,000 per year. A little more than a quarter of Medicare Advantage members had an income of $50,000 per year or more (28 percent).

Lower senior spending

Six in ten seniors did not have a premium for their Medicare Advantage plan, one ACHP fact sheet shared. Seniors also experienced lower healthcare costs due to the Medicare Advantage out-of-pocket healthcare spending cap.

READ MORE: Medicare Advantage Quality of Care Surpasses Traditional Medicare

A separate report by UnitedHealth Group discovered that 3.5 percent of traditional Medicare beneficiaries spent more than Medicare Advantage members. Whereas these traditional Medicare beneficiaries were spending around $12,000 in out-of-pocket healthcare spending, Medicare Advantage members had an out-of-pocket healthcare spending limit of $6,700.

Medicare Advantage members were not the only stakeholders who saved on healthcare spending due to their health plan selection, the ACHP fact sheets stated. Medicare Advantage cost taxpayers 9.5 percent less than traditional Medicare did. This statistic included the costs of Medicare Advantage plans’ extra benefits.

Traditional Medicare saw an improper payment of 6.7 percent in 2020, compared to Medicare Advantage’s 6.0 percent improper payment rate.

“MA incentivizes health plans, providers and health systems to closely coordinate care to improve health outcomes and reduce costs,” the ACHP fact sheet argued. “In areas where MA is prevalent, doctors employ those innovations learned with MA when caring for patients in traditional Medicare – creating efficiencies and providing higher quality care.”

Higher quality of care

The Medicare Advantage Star Ratings system incentivizes Medicare Advantage plans to value quality over quantity, another ACHP fact sheet confirmed.

READ MORE: Prescription Coverage Draws Beneficiaries to Medicare Advantage

Almost eight in ten Medicare Advantage members (78 percent) were in a Medicare Advantage plan that boasted 4 stars or more, 52 percent more than when the Medicare Advantage Star Ratings system started eight years prior.

Nearly all Medicare Advantage members were satisfied with their health plan (99 percent), whereas 85 percent of traditional Medicare beneficiaries expressed satisfaction.

Medicare Advantage plans’ higher quality care was perhaps most evident in their low hospitalization rates. Medicare Advantage plans had a 57 percent lower unnecessary hospitalization rate than Medicare did, the ACHP fact sheet explained.

High enrollment growth

Medicare Advantage plans also experienced high enrollment growth. From 2013 to 2020, Medicare Advantage saw a 60 percent increase in its enrollment.

Medicare Advantage members also had more Medicare Advantage health plan options in which to enroll. In the past nine years, the number of Medicare Advantage plans rose 161 percent.

The Better Medicare Alliance found that the number of Medicare Advantage plans has increased 49 percent since 2017 alone.

The trend is expected to continue, with experts predicting that Medicare Advantage will hit 33 million enrollees by 2030.

Meanwhile, enrollment in traditional Medicare dropped more than 100,000 beneficiaries in 2019, a separate ACHP fact sheet stated.

Looking to the future, payer experts have predicted that improving member experience for dual eligibles will be a significant focus for Medicare Advantage plans.

"Duals are unique: they have to work with the state, they have to work through federal,” Mike Polen, senior vice president and chief executive officer of Medicare at Centene, told HealthPayerIntelligence.

“What you're continuing to see is the need to integrate those two programs together so that the member has a seamless overall experience. Again, the focus is on being able to coordinate their care better than they currently are today, looking for solutions where you're integrating the various state and federal programs together, which ultimately should reduce costs and improve quality for the member.”

This group also presents an opportunity for Medicare Advantage plans to boost enrollment even further, an analysis by LEK Consulting added.