How MA Special Needs Plans Compare to Traditional Medicare, MA

October 14, 2021 - Medicare Advantage special needs plan members are more racially and ethnically diverse, are in lower income brackets, and tend to be sicker member populations than traditional Medicare or Medicare Advantage plan members, according to research from the Commonwealth Fund.

To assess the differences between Medicare Advantage and traditional Medicare beneficiaries, the researchers analyzed both the 2018 Medicare Current Beneficiary Survey and the Commonwealth Fund 2021 International Health Policy Survey of Older Adults.

The results showed that, after removing the 2.6 million special needs plan members from the assessment, Medicare Advantage and traditional Medicare beneficiaries have strongly similar demographic data. 

In both cases, 12 percent of beneficiaries were over the age of 85, around four in ten had an income that was 200 percent of the federal poverty level or less, and less than a fifth of each population of beneficiaries was eligible for full-year low-income subsidies.

The two areas in which the populations were less compatible were urban living and facility dwelling. 

Nearly a quarter of traditional Medicare beneficiaries lived in a city (24 percent), compared to 14 percent of Medicare Advantage beneficiaries. Four percent of traditional Medicare beneficiaries were in long-term or residential care facilities, as opposed to one percent of Medicare Advantage beneficiaries.

Additionally, Medicare Advantage plans surpassed traditional Medicare on care management measures.

The racial and ethnic demographic mix was similar between traditional Medicare and Medicare Advantage as well. Over eight in ten Medicare beneficiaries identified as White individuals, as did 76 percent of Medicare Advantage beneficiaries. 

Meanwhile, six percent of traditional Medicare beneficiaries and eight percent of Medicare Advantage beneficiaries reported that they were Hispanic individuals. Eight and eleven percent of traditional Medicare and Medicare Advantage respondents, respectively, identified as Black individuals.

The distribution of chronic conditions was also similar between traditional Medicare and Medicare Advantage beneficiaries. Around seven in ten Medicare Advantage beneficiaries and traditional Medicare beneficiaries had three co-occurring chronic conditions or more.

Even the types of conditions were similar, with arthritis, cancer, and diabetes constituting the top three most common chronic conditions among both Medicare populations.

The cost was the biggest barrier to accessing healthcare in both Medicare Advantage and traditional Medicare.

Medicare Advantage special needs plans, however, were very different from the other two types of Medicare coverage. Over nine in ten special needs plan members lived on an income that was 200 percent of the federal poverty level or less, with 60 percent being dual eligible and 90 percent of beneficiaries eligible for a full-year low-income subsidy.

Moreover, special needs plans were far more diverse. Three in ten members identified as Black individuals, 23 percent reported that they were Hispanic individuals, and 40 percent said that they were White individuals.

Special needs plan members were also sicker than Medicare Advantage or traditional Medicare members. Half of all special needs members had six or more chronic diseases and another 32 percent had three to five co-occurring conditions. Diabetes, arthritis, and depression were higher in special needs plans.

All three types of Medicare coverage saw the same level of satisfaction across their consumers.

Based on these outcomes, the researchers questioned whether Medicare Advantage plans are receiving the right amount of funds. While these plans offer necessary services, they do not appear to produce results that are very different from their traditional Medicare counterparts.

“Paying Medicare Advantage plans appropriately and fairly is important not only to their enrollees but also to beneficiaries in traditional Medicare, since higher payments to plans raise Part B premiums for all beneficiaries and erode the solvency of the Medicare Hospital Insurance Trust Fund,” the report concluded. 

“With Medicare Advantage enrollment projected to overtake traditional Medicare enrollment over the next decade, maintaining sufficient coverage choices and facilitating innovation — while also ensuring that Medicare Advantage plans provide efficient, effective, and equitable care — will remain a challenging balancing act.”

Proponents of Medicare Advantage have insisted that these plans surpass traditional Medicare in quality of care. Medicare Advantage plans have been more innovative regarding value-based care initiatives.

Some studies have suggested that Medicare Advantage coverage costs less than traditional Medicare does.