---------------------------------------

BY GEORGE HALVORSON

We know from the current annual report from the Medicare trustees that Medicare Advantage is saving Medicare, and that Medicare will be a much stronger program as Medicare Advantage continues to grow.

When we look at actual numbers from that report, we see that Medicare Advantage cost Medicare $403.3bn last year.

The report shows that Medicare is growing 6.7% each year in total revenue. We see that Medicare Parts A and B have expense growth that slightly exceeds 8%, and that Medicare Advantage is projected to have expense growth of 4.2% for the year.

That means we’re losing money from the fee-for-service part of the Medicaid program — and that is eating into the Medicare trust fund. We also can see that Medicare Advantage is making a surplus for Medicare, and is increasing the size of the fund.

We know that Medicare Advantage bids against the average cost of Medicare in every county to create the capitation levels for each year. Those bids are typically discounted by 15% (or more) from the average Medicare cost.

Those discounted bids cost Medicare less in actual dollars each month. The Medicare Advantage critics speculate about coding levels for the plans, but the Medicare trust fund doesn’t care about codes.

They only care about actual dollars. When you look at actual dollars, we see that Medicare spent $403.3bn to pay for the coverage with Medicare Advantage plans.

Medicare Advantage costs less than Medicare because the plans deliver much better care in many key areas. Fee-for-service Medicare for low-income people has some of the highest blindness rates in the world.

Medicare Advantage plans have quality goals and processes that are anchored on the medical reality that you can reduce the blindness rate by 60% when blood sugar is controlled for diabetic patients. So the plans all have blood sugar management goals and their performance in those areas improved under Covid.

Low-income Medicare patients for fee-for-service Medicare have some of the highest amputation rates in the world. Medicare spends billions on amputations. The Medicare Advantage plans all know that 90% of the amputations are caused by foot ulcers.

They know that we can reduce foot ulcers by more than 40% with dry feet and clean socks. They have much lower costs for amputations, because over 90% of the Medicare Advantage special-needs plan patients have clean socks.

The Medicare Advantage capitation levels and benchmarks are based on using the average cost of fee-for-service Medicare in every county as the starting point for the process. The plans have much better care in a number of areas, so the plans bid at discounts that exceed 15% from those Medicare average cost levels.

The plans still make a profit from those lower bids, because care is so much better. The program was designed as part of the Affordable Care Act to take the possible profits for the plans and turn them into higher benefits for the members.

That worked extremely well.

The plans offer dental, vision, and hearing benefits along with other community support benefits from the profits they make with better care. Fee-for-service Medicare is an extremely poor and expensive care purchasing and delivery process. The average cost of care that sets up the bidding benchmarks in every county for the plans creates a cashflow that is a much better and more competent use of the Medicare dollar than traditional Medicare.

Some of the plans use their profits from those bids to buy Medicare Part D drug coverage for their members. Medicare Part D is an extremely good and solid program for getting prescription drugs to Medicare members. The plans both work with that program to provide the right drugs, and they sometimes even pay the Part D premiums for their members from the profits.

That payment of that premium does not increase the overall cost of Medicare. The profits that were needed to buy that Part D coverage were actually included in the $403.3bn total cost of Medicare Advantage that we saw in the trustee report.

Medicare broke even overall this year on the reserve levels. We know from the fact that Medicare Advantage capitation costs will increase by 4% this year, in the face of the overall program receiving 6.7% in additional revenue, that every member of Medicare Advantage will financially strengthen Medicare.

The highest-need and the lowest-income Medicare members have dual eligibility for both Medicaid and Medicare. Some of those members have been badly damaged by social determinants of health issues and inequities. And some of them actually received team care for the first time in their life when they enrolled in Medicare Advantage Special Needs Plans.

The costs are also lower for Medicare when that happens. The 2023 Medicare trustee report said that Medicare Part A had a decrease in their expenses when some of the most expensive patients enrolled in Medicare Advantage Special Needs Plans. That’s far better care for those members.

The Medicare Advantage Payment Increase for 2024 is now Projected to be 3.32%

What we know for an absolute fact from that trustee report, is that the $403.3bn expense that we saw for 2022 for Medicare Advantage will not grow beyond the 6.7% income increase level that we’ll see for the Medicare program overall. CMS is currently projecting a 3.32% increase in the payment for 2024.

We know that we’re absolutely safe and financially secure with the long-term financial future for those Medicare Advantage members, because there’s no possible combination of circumstances or processes or transactions that can achieve what the Health Affairs pieces have been projecting explicitly and directly about the future bankruptcy of Medicare, based on Medicare Advantage upcoding processes.

Those warnings never made sense to anyone who looked at the obvious and highly visible fact that the plans were already discounting their prices 15% from the average cost of Medicare. And there was nothing to be gained by having higher codes in any of those areas as a source of revenue for the plans.

That was a fake news process, but it has had followers. We need everyone to now look at the actual Medicare trustees 2023 annual report and then look at the 2023 Medicare Advantage and Part D Rate Announcement from CMS, and have that information from those credible sources give us a chance to relax, enjoy, understand, and appreciate the financial future that the current payment model now creates for us all — and how well that payment approach is doing right now for Medicare.

CMS eliminated any possibility of upcoding in 2020. CMS replaced the actual coding system in 2020 with individual encounter reports, which include the diagnosis information for each patient.

That data is now current and close to perfect.

You can see from the CMS payment directions, and from the actual 2023 rate announcement narrative, that encounter-based data-gathering approach is what we use now for every plan. They report actual encounters as opposed to coding anything in a way that creates those negative outcomes that critics claim are happening.

You can see from the CMS reports, and from the current trustee report, the correct data is resulting in a 4.2% increase in plan revenue for next year. That low increase in plan cost is actually saving Medicare in a very gentle, useful, and effective way.

Anyone challenging that conclusion will see it validated entirely in a year from now. The 2024 Medicare trustees report will show how much Medicare Advantage will cost in 2025, how strong the trust fund is now, and how strong it will continue to be.

George Halvorson is Chair and CEO of the Institute for InterGroup Understanding and was CEO of Kaiser Permanente from 2002-14.

-----------------------------------------

By: Ryan Bose-Roy
Title: The Truth About Medicare Advantage Saving Medicare
Sourced From: thehealthcareblog.com/blog/2023/06/21/the-truth-about-medicare-advantage-saving-medicare/
Published Date: Wed, 21 Jun 2023 12:54:09 +0000

Read More