qotd: Is Austin Frakt right that Medicare Advantage may be worth the extra cost?

The New York Times
August 18, 2014
Medicare Advantage Is More Expensive, but It May Be Worth It
By Austin Frakt

Medicare Advantage plans — private plans that serve as alternatives to
the traditional, public program for those that qualify for it —
underperform traditional Medicare in one respect: They cost 6 percent more.

But they outperform traditional Medicare in another way: They offer
higher quality. That's according to research summarized recently by the
Harvard health economists Joseph Newhouse and Thomas McGuire, and it
raises a difficult question: Is the extra quality worth the extra cost?

In contrast to studies in the 1990s, more recent work finds that
Medicare Advantage is superior to traditional Medicare on a variety of
quality measures. For example, according to a paper in Health Affairs by
John Ayanian and colleagues, women enrolled in a Medicare Advantage
H.M.O. are more likely to receive mammography screenings; those with
diabetes are more likely to receive blood sugar testing and retinal
exams; and those with diabetes or cardiovascular disease are more likely
to receive cholesterol testing.

Contemplating these more recent findings on quality alongside the higher
taxpayer cost of Medicare Advantage plans invites some cognitive
dissonance. On the one hand, we shouldn't pay more than we need to in
order to provide the Medicare benefit; we should demand that
taxpayer-financed benefits be provided as efficiently as possible.
Medicare Advantage doesn't look so good from this perspective.

On the other hand, we want Medicare beneficiaries — which we all hope to
be someday, if we're not already — to receive the highest quality of
care. Here, as far as we know from research to date, Medicare Advantage
shines, at least relative to traditional Medicare.

Is Medicare Advantage worth its extra cost? A decade ago when quality
appeared poor, the answer was easy: No. Today one must think harder and
weigh costs against program benefits, including its higher quality. The
research base is still too thin to provide an objective answer. Mr.
Newhouse and Mr. McGuire hedge but lean favorably toward Medicare
Advantage, saying cuts in its "plan payments may be shortsighted."

http://www.nytimes.com/2014/08/19/upshot/medicare-advantage-is-more-expensive-but-it-may-be-worth-it.html?rref=upshot&abt=0002&abg=1

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The Milbank Quarterly
June 3, 2014 (online)
How Successful Is Medicare Advantage?
By Joseph P. Newhouse and Thomas G. McGuire

Quality of Care in TM (traditional Medicare) and MA (Medicare Advantage)

The plans' medical management methods could, in principle, improve the
quality of their care relative to that of TM. Unfortunately, it is
difficult to compare the quality of care in TM and MA because the data
necessary to do so are sparse (John Ayanian et al). A few comparisons
can be made, however, from the data reported by beneficiaries in the
Consumer Assessment of Healthcare Providers and Systems (CAHPS) surveys,
although the beneficiaries' ability to assess the technical quality of
their care clearly is limited.

http://onlinelibrary.wiley.com/doi/10.1111/1468-0009.12061/full

Joseph P. Newhouse is a member of Aetna's Board of Directors:
http://www.aetna.com/about-us/corporate-governance/board-of-directors.html

Thomas McGuire coauthored the paper, "Making Medicare advantage a
middle-class program":
http://www.hcp.med.harvard.edu/publications/making-medicare-advantage-a-middle-class-program

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Health Affairs
July 2013
Medicare Beneficiaries More Likely To Receive Appropriate Ambulatory
Services In HMOs Than In Traditional Medicare
By John Z. Ayanian, Bruce E. Landon, Alan M. Zaslavsky, Robert C.
Saunders, L. Gregory Pawlson and Joseph P. Newhouse

Our results suggest that the positive effects of more-integrated
delivery systems on the quality of ambulatory care in Medicare HMOs may
outweigh the potential incentives to restrict care under capitated payments.

From the Conclusion

The Affordable Care Act authorized CMS to begin contracting with
accountable care organizations that will share financial risk with CMS
for the costs and quality of care received by the traditional Medicare
beneficiaries they serve.23 Through the Medicare Pioneer Accountable
Care Organizations and Shared Savings Programs, these organizations are
eligible to receive bonus payments, initially related to reporting
quality measures and subsequently to achieving higher quality of care.

These recent parallel expansions of financial incentives for achieving
better quality of care in Medicare Advantage and traditional Medicare
heighten the need for performance measures that can be compared between
these two major components of the Medicare program. Such measures will
enable policy makers, health care providers, and Medicare beneficiaries
to assess whether the quality of care in Medicare Advantage health plans
differs from that provided within accountable care organizations and
from that provided outside these organizations in the traditional
Medicare program.

http://content.healthaffairs.org/content/32/7/1228.full

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PNHP Blog
July 17, 2013
Pioneer Accountable Care Organizations disappoint
By Don McCanne

The Pioneer Accountable Care Organizations (ACOs) were already existing
health care organizations that were selected as potentially exemplary
models that could show the rest of the nation how well ACOs can work to
achieve higher quality at lower costs. We now have a report from CMS of
the initial "successes" of this model.

Considering the added administrative hassle, the savings were
negligible, with only 13 of the 32 organizations saving enough to
receive "shared savings" from CMS, and 2 actually lost money.

Even the supposed quality gains were unimpressive since they represented
only 15 measurements which the organizations were told in advance would
be used to determine whether or not they met quality standards. These
teach-to-the-test gains can hardly represent the overall quality status
of each organization.

http://pnhp.org/blog/2013/07/17/pioneer-accountable-care-organizations-disappoint/

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Comment by Don McCanne

The private Medicare Advantage plans promised higher quality at lower
cost. They clearly have failed on the promise of lower costs, but are
they actually providing improved quality that is worth the extra cost?

Austin Frakt cites the Milbank Quarterly article by Joseph Newhouse and
Thomas McGuire as providing the evidence for higher quality. In their
article they state, "it is difficult to compare the quality of care in
TM (traditional Medicare) and MA (Medicare Advantage) because the data
necessary to do so are sparse." They cite as their source a Health
Affairs article by John Ayanian et al (Joseph Newhouse being a coauthor)
which states, "These recent parallel expansions of financial incentives
for achieving better quality of care in Medicare Advantage and
traditional Medicare heighten the need for performance measures that can
be compared between these two major components of the Medicare program."
Yes, performance measures that we do not have.

The ideological preferences of Newhouse and McGuire can be gleaned from
the links above - a bias which shines through in their Milbank Quarterly
article.

The point is that, other than for a few primitive teach-to-the-test
measurements, measurement of quality is still in the dark ages. The
Medicare Advantage plans would be expected to do better on these few
measurements since they use them for marketing purposes (Medicare star
ratings) and to gain bonuses. Even Austin Frakt writes, "The research
base is still too thin to provide an objective answer."

The case for higher quality in Medicare Advantage plans has not been made.


An excellent article that concurs with this view: "No, We Still Don't
Have Proof That Private Medicare Plans Are Better," by Thomas Huelskoetter:

http://thinkprogress.org/health/2014/08/20/3473823/medicare-advantage-costs/