Academic journal article Care Management Journals

New York's Medicare Marketplace: Examining New York's Medicare Advantage Plan Landscape in Light of Payment Reform

Academic journal article Care Management Journals

New York's Medicare Marketplace: Examining New York's Medicare Advantage Plan Landscape in Light of Payment Reform

Article excerpt

The Patient Protection and Affordable Care Act (ACA) provided for cost savings in the Medicare program, in part to underwrite coverage expansion to Medicare beneficiaries, to finance new coverage for those not eligible for Medicare, and to strengthen Medicare's financial outlook. One cost-saving measure, a reformulation and reduction in payments to private health insurance plans that provide Medicare benefits through the Medicare Advantage (MA) program, had a sound policy basis but was criticized, particularly by opponents of the ACA, as a measure that would lead to increased costs, reductions in benefits, and diminished plan choices to Medicare beneficiaries enrolled in MA plans. Despite dire predictions to this effect, a review of a sample of MA plan offerings in New York State in 2012 shows that Medicare beneficiaries enrolled in such plans did not experience significant benefit reductions or increased costs. While the number of plan offerings decreased, the reduction was mostly caused by the elimination of duplicative plan choices in 2011.

Although the MA plan executives we interviewed indicated that further reductions in plan reimbursement in future years-tempered by potential bonus payments for meeting quality and performance metrics-could impact plan costs and benefits, they believed plans will employ a number of strategies to remain in the market and maintain beneficiary benefits and cost structures. However, government regulators and consumer advocates will need to examine MA plan offerings in the coming years to determine the effect of plan reaction to the ACA payments on beneficiaries' costs for coverage and access to care.

The Patient Protection and Affordable Care Act (ACA) of 2010 set in motion a number of significant changes to health care and health insurance programs in the United States, including the Medicare program.1 The changes to Medicare fall into three primary categories: (a) expansion of coverage for prescription drugs and preventive care, (b) cost-saving mechanisms to finance that coverage expansion, and (c) new coverage for those not eligible for Medicare.2 While cost savings to achieve these measures were produced in large part through curtailing future growth of reimbursement rates to health care providers such as hospitals, nursing homes, and home health agencies,3 the ACA also provided for significant reductions in payments to private health insurance plans that administer Medicare benefits through the Medicare Advantage (MA) program.

The reductions to MA plan reimbursement drew concerns from health insurance companies and Medicare beneficiaries, as well as dire predictions from opponents of the ACA, that MA plans would reduce benefits, increase premiums and cost sharing, and even eliminate some or all of their Medicare insurance offerings.4,5 Although MA plan enrollment varies across the country, such changes could have had a substantial effect on people with Medicare in MA plans, particularly in those regions where there is relatively high enrollment in MA plans, such as New York State.6

Nationally, roughly one in four Medicare beneficiaries is enrolled in an MA plan.7 New York is 1 of 13 states where the MA penetration rate exceeds 30%. Moreover, New York has a high total number of MA enrollees: more than 900,000 New Yorkers are enrolled in MA plans-more than in any other state except Florida and California.9 The urban counties of Queens, Kings, and Erie each have approximately 100,000 plan enrollees and account for nearly one-third of the State's entire MA plan population.10 In counties like Livingston and Genesee, more than 50% of Medicare-eligible beneficiaries are enrolled in MA plans. Breakdowns of the penetration rates and number of MA plan enrollees are detailed in Tables 1 and 2.

Given New York's higher-than-average MA enrollment penetration rate and high total number of enrollees, New York policymakers, plans, providers, beneficiaries, and consumer advocates all have an interest in understanding the implications and impact of the ACA-mandated MA payment reforms on the MA plan landscape. …

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