Medicare Advantage and Low Value Care
There are no easy ways to reduce U.S. health care spending, but one of the most promising avenues is to reduce the volume of what’s known as “low value care” – unneeded tests and medical procedures that produce little if any health benefits and can actually harm patients.
“The estimated cost of waste in the U.S. health care system ranged from $760 billion to $935 billion, accounting for approximately 25 percent of total health care spending,” according to a 2019 review of research on low value care published in the Journal of the American Medicare Association (JAMA). “The projected potential savings from interventions that reduce waste, excluding savings from administrative complexity, ranged from $191 billion to $286 billion, representing a potential 25 percent reduction in the total cost of waste.”
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To give you an idea of some of the specific medical care we don’t need, here’s a table of health care “waste” produced in a 2017 study by the Washington [state] Health Alliance:
Top 10 Wasted Health Procedures in Washington, 2017
Procedure Est. Spend Percent
($ million) Wasted
Preoperative baseline lab studies $ 74 85
Annual EKGs and cardiac screening $ 62 28
Imaging tests for eye disease $ 40 69
Two or more concurrent antipsychotic meds $ 27 24
Peripherally inserted central catheters (PICC) $ 27 100
in stage III-IV kidney patients
Opiates prescribed for acute low back pain $ 13 94
Preoperative EKG, chest X-ray, PFT $ 11 17
Imaging for uncomplicated headache $ 9 74
PSA screening $ 8 86
Vitamin D deficiency screening $ 8 29
Source: Washington Health Alliance
If you want to delve into deeper weeds here, check out my health care book. (Paid GWY subscribers can see a full outline of the book, and links to hundreds of information sources cited in the book.)
Traditional or original Medicare is regularly cited as a major culprit in encouraging low value, unneeded health care. Original Medicare is “fee for service” health care. If a test or procedure is covered by Medicare, and a licensed health provider proscribes such a treatment, Medicare generally will pay for it with no questions asked. Fee for service health care can encourage the over-consumption of care, especially since doctors and hospitals get paid for it whether you need it or not. Who doesn’t want a test, especially one fully covered by insurance?
Medicare Advantage (MA) plans, by contrast, are designed to provide managed care. These private insurance plans often review the care you’ve been prescribed before you receive it. They can weed out low-value care, in theory, and focus on “value based care” that is associated with successful outcomes and improved patient health.
MA plans have grown to cover nearly half of all Medicare beneficiaries. They generally are cheaper than original Medicare and usually cover dental, hearing, and vision needs that original Medicare is not permitted to cover. Everything you want to know about MA plans, and then some, is included in a recent report from the Kaiser Family Foundation – an invaluable go-to source for accurate and timely health information.
Managed care is held out as one of the best hopes to rein in U.S. health spending. To date, however, the opposite has been true. Private MA plans spend more money per Medicare beneficiary than does original Medicare. MA advocates say the jury hasn’t even been empaneled yet on the value of MA plans. Give them more time and, in particular, give them credit for better health outcomes.
Medicare advocacy groups, such as the Center for Medicare Advocacy, the Medicare Rights Center and the National Committee to Preserve Social Security and Medicare, have been wearing out their alarm bells with warnings about the actual and possible flaws in MA plans.
By marked contrast, an alternative view of reality comes from MA insurers, including the largest one, UnitedHealth. Here is what UnitedHealth Group CEO Andrew Witty had to say about MA plans last July in an earnings call with investment analysts:
“Comprehensive, value-based care is a central theme of our growth strategy — helping more patients and care providers transition from traditional fee-for-service to a value-based orientation. We aim to drive better and more consistent care outcomes at lower overall cost, often for people who are among society’s most vulnerable with multiple chronic conditions, limited income and unmet social needs. . . .
“People served by Medicare Advantage spend about 40 percent less out-of-pocket than those participating in fee-for-service, which translates into savings of about $2,000 each year for seniors … most of whom are on limited income.
“And compared to traditional fee-for-service — Medicare Advantage plans devote up to 30 percent more in resources to primary care and perform up to 50 percent more preventative screening and testing services for their seniors. The response among seniors in our plans is positive: Plan satisfaction ratings have risen by 450 basis points over the past five years, nearly twice that of the industry. [Witty was referring to Net Promoter Scores, which are used by many companies to help evaluate their customer service.] Consumer satisfaction is best demonstrated by the almost 3.4 million additional seniors who have chosen our plans over the same period.”
Excessive low value care is not a consumer issue, in large part because patients seldom pay for it out of their own pockets, know what it costs, or even have a sense they don’t need such care. Clinicians and health insurance experts know better, or should.
A recent JAMA research study compared the incidence of low value care among nearly 2.5 million people with original Medicare and MA plans. If the MA plans are doing the job in emphasizing value-based care, you’d think it would have been reflected in this study. Well, actually, it wasn’t. Or not much, anyway.
“Those enrolled in MA received 9.2 percent fewer low-value services than those in TM [traditional Medicare] (23.1 vs 25.4 total low-value services per 100 beneficiaries),” the study found. Neither figure is very good, and in any event a weak argument that MA plans are better at reducing health waste.
“Low-value care in the Medicare program is prevalent, costly, potentially harmful, and persistent,” the authors commented. “Although Medicare Advantage (MA) plans can use managed care strategies not available in traditional Medicare (TM), it is not clear whether this flexibility is associated with lower rates of low-value care.”
And so, here’s another case where the search for the Advantage in Medicare Advantage has come up empty so far.
Philip Moeller is the principal author of the Get What’s Yours series of books about Social Security, Medicare, and health care. @PhilMoeller