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Seniors Tend To Quit Medicare Advantage When Health Declines

Bars show the proportion of people who left one type of Medicare coverage for the other after receiving either long-term or short-term nursing home care.
The Florida Channel
Leon County Judge John Cooper on June 30, 2022, in a screen grab from The Florida Channel.

Senior citizens are switching from privately run insurance plans to traditional Medicare when they face serious, long-term health conditions, a study shows.

Researchers at Brown University found that 17 percent of Medicare Advantage patients who entered nursing homes for long-term care chose to switch to traditional Medicare the following year. Only 3 percent of similar patients in Medicare made the decision to go to a private Medicare Advantage plan.

The story is the same for patients who required short-term nursing care or home health care. A larger number switched out of Medicare Advantage plans than chose to move into them from traditional Medicare.

The results suggest that the private Medicare Advantage health plans are managing to get rid of patients once their care becomes too costly, says economist Momotazur Rahman, the study's lead author. "When the plan finds out this patient is very costly, there are incentives for the plan to get rid of the patient," he says.

The findings were published in the October issue of Health Affairs.

The shift of patients who were insured by private companies back to traditional Medicare rolls can cost taxpayers more.

The government pays a set monthly feefor each patient in Medicare Advantage plans. The amount varies according to a risk score for each person. But since the ultimate cost for patient care is borne by the private plans, insurers' profits can suffer if patients are more expensive to care for than expected.

The private plans don't kick people out. But they can provide reasons to leave, Rahman said. Those measures include imposing steep cost-sharing as patients need more expensive care, which is common for nursing or home care patients. They can also limit care for expensive treatments, such as cutting benefits for rehab after a hip replacement. And they can restrict their networks in some areas so physicians who care for particularly ill patients are hard to find or get to.

The Center for Medicare and Medicaid Services has been looking to minimize this so-called adverse selection — when sicker patients move back onto the government's health care rolls. The steps include paying more to private plans for sicker patients, and giving them incentives to manage costs.

These incentives aren't enough, according to Rahman. The agency should consider imposing penalties on the plans, he says, when patients "disenroll."

Medicare Advantage plans "definitely should not be telling people to leave in any kind of way," says Jack Hoadley, an analyst at Georgetown University's Health Policy Research Institute. "There's no evidence in this study that they are."

But limits on care in Medicare Advantage plans that are designed to cut costs can make those plans less appealing to sicker patients, Hoadley says. The Brown study, he says, suggests the incentives in the program aren't working properly.

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Alison Fitzgerald Kodjak is a health policy correspondent on NPR's Science Desk.