AMA: Medicare Advantage plans' lack of competition harms patients, physicians

 Medicare Advantage (MA) markets are highly concentrated, which could harm both patients and doctors, according to a new study.

The American Medical Association (AMA) takes an annual look at the competition between health insurers across 380 metropolitan statistical areas (MSAs) in the U.S. and includes for the first time this year MA plans.

The results do not paint a pretty picture, said AMA, because the MSAs tend to be dominated by one or two insurers.

“MA markets have undergone a consistent though gradual decrease in average concentration since 2017,” the study said. “Nonetheless, this remains significantly above the threshold for highly concentrated markets.”

The Herfindahl-Hirschman Index (HHI) measures market concentration to determine competitiveness. A competitive market has an HHI score of 1500 or lower; 1500 to 2500 for moderately competitive; and anything over 2500 is considered highly concentrated, and therefore not very competitive. Seventy-nine percent of MSAs had MA markets with low levels of competition.

AMA President Jack Resneck Jr., M.D., said in an AMA press release that “unchecked market power among insurers is a formula for higher premiums, lower coverage, and inadequate levels of patient care, concerns of great relevance to MA. Most large MA insurers are accused of fraud and flouting the authority of federal agencies. The new AMA study shines a light on the lack of competition in MA markets across the country and will help regulators and lawmakers better scrutinize anticompetitive insurer behavior that harms patients and physicians in an industry where exploitative business practices are already commonplace.”

Mary Beth Donahue, president and CEO of the Better Medicare Alliance, an MA research and advocacy group, has a different take on how MA plans perform.

“In 2022, seniors could choose from an average of 39 Medicare Advantage plan options,” she told Fierce Healthcare. “This competition is leading to the lowest average Medicare Advantage monthly premiums in 16 years according to CMS data, and delivers high marks for quality and affordability, with higher average Star Ratings for 2023 than in 2021.”

She said that MA, which covers about 30 million Americans, constitutes a crucial part of the Medicare safety net.

“Unfortunately, some of the claims in this [AMA] announcement are deeply disconnected from the lived experiences of actual Medicare Advantage beneficiaries and risk misleading seniors during open enrollment,” says Donahue. “In reality, premiums are moving down, not up, and seniors on Medicare Advantage are saving nearly $2,000 per year compared to fee-for-service Medicare—providing peace of mind during tough economic times. Meanwhile, Medicare Advantage beneficiaries receive extra benefits unavailable in FFS Medicare, are more likely to report access to a usual source of care, and report an overwhelming 94% satisfaction rate.”

The AMA press release cites an Oct. 8 New York Times article that stated that “eight of the 10 biggest Medicare Advantage insurers—representing more than two-thirds of the market—have submitted inflated bills, according to the federal audits. And four of the five largest players—UnitedHealth, Humana, Elevance and Kaiser [Permanente]—have faced federal lawsuits alleging that efforts to over-diagnose their customers crossed the line into fraud.”

Insurers disputed the allegations, which they said were caused by irregularities resulting from flawed federal audits. They told the NYT that “their aim in documenting more conditions was to improve care by accurately describing their patients’ health. Many of the accusations reflect missing documentation rather than any willful attempt to inflate diagnoses, said Mark Hamelburg, an executive at AHIP, an industry trade group. ‘Professionals can look at the same medical record in different ways,’ he said.”

The AMA study also found that 34% of MSA-level MA markets had one insurer with a share of 50% or more, while 6% of MSA-level markets had one insurer with a share of 70% or more. The 10 states with the least competitive MA markets were:

1. Vermont
2. North Dakota
3. Wyoming
4. Montana
5. Rhode Island
6. South Dakota
7. West Virginia
8. District of Columbia
9. Nebraska
10. Louisiana

The 10 largest health insurers in the U.S. by Medicare Advantage market share were:

1. UnitedHealth Group (28%)
2. Humana (19%)
3. CVS Health, the parent company of Aetna (11%)
4. Kaiser Permanente (7%)
5. Elevance Health, formerly Anthem (6%)
6. Centene (4%)
7. Cigna (2%)
8. Blue Cross Blue Shield of Michigan (2%)
9. Highmark (1%)
10. SCAN Health Plan (1%)

Commercial markets in the MSAs also lack competition, according to the AMA study.

“Although there were some fluctuations in either direction in the intervening years, the share of commercial markets that are highly concentrated rose from 71% to 75% and average market concentration increased from [an HHI of] 3322 to 3504 between 2014 and 2021," the study found.

Several insurers had large market shares in the MA and commercial markets, with UnitedHealth Group being the largest in both. CVS Health is the third largest in both markets. Also among the top 10 in both markets: Kaiser Permanente, Blue Cross Blue Shield of Michigan and Highmark.

For commercial markets, the AMA study found that 48% percent of MSA-level markets had one insurer with a share of 50% or more, while 11% of MSA-level markets had one insurer with a share of 70% or more.

https://www.fiercehealthcare.com/payers/ama-study-argues-medicare-advantage-plans-lack-competition-harms-patients-physicians