MedPAC: Medicare Paid MA Plans $38 billion for Non-Medicare Services in 2024

 by Cheryl Clark

Last year, Medicare Advantage (MA) plans spent $38 billion on services traditional Medicare doesn't pay for, such as gym memberships, meals, transportation, and dental care.

But a reportopens in a new tab or window presented to the Medicare Payment Advisory Commission (MedPAC) Thursday lamented the agency's inability to evaluate the value of those services, to what extent beneficiaries actually used them, and with which companies the plans contract to provide them.

"Gaps in the data make it difficult for us to assess the value that supplemental benefits may provide to enrollees and to the program," said Stuart Hammond, MPP, MPH, a MedPAC senior analyst.

The independent 17-member commission advises Congress on payment and policy affecting the Medicare program for some 68.4 million beneficiaries, 34.2 million of whom are enrolled in MA plans. Medicare allows MA plans to offer supplemental benefits with the intent they will make patients healthier or improve access to services, and the plans use them heavily to woo enrollees every year.

The report also looked at rebates that Medicare makes to MA plans -- rebates that the plans use in part to pay for these extra benefits. The rebates -- which amounted to $83 billion last year -- are based on costs in each plan's geographic area as well as other factors.

Hammond said that $2,329 was the average rebate amount per beneficiary in conventional MA plans in 2024, but 27%opens in a new tab or window of that went to these non-Medicare services. Those services included annual physical exams, spending allowance for over-the-counter items, acupuncture, a personal emergency response system, and remote-access technologies like an emergency response system and -- in some plans -- safety modifications for the home. The remaining 73% went to pay for drug benefits, reduced Part B premiums and reduced cost-sharing.

For other MA plans targeting populations with special needs, called MA SNPs, the rebate amount was $3,090, with 85% of that going to non-Medicare services.

"As Medicare spending for MA supplemental benefits grows, it is increasingly important for policymakers to have reliable information about the extent to which enrollees use the benefits available to them," Hammond said. The staff reviewed websites of MA parent organizations and found that dental and vision benefits often were administered by contracted dental or vision insurance companies on behalf of the MA plan; some plans contracted with community organizations.

However, some plans administered benefits such as food or transportation internally, in effect passing the payments vertically within the same company. "Information about these arrangements was harder to find on plan websites," he said, but often the plan requires enrollees to access benefits "exclusively through providers owned by the plan's parent organization."

The commissioners went into overtime asking questions and expressing concerns. "It's kind of shocking when you see, especially for the Special Needs Plans' 'Other Benefits,' the total dollar amount we're talking about," said commissioner Stacie Dusetzina, PhD, professor of health policy at Vanderbilt University Medical Center. It "is just an enormous amount of money to be going towards benefits that we don't track."

Plans are required to provide encounter data to CMS, but the CMS system for collecting it for dental services was not adequate until recently and not all plans do a good job explaining how the money was used, Hammond said. For other kinds of supplemental benefits, "there are not well-established procedure codes corresponding to the benefits," he added. "As such, plans have reported being confused about if and how to submit encounter records for these services." For example, the plan may say it offers a fitness benefit, which could be anything from an in-person annual membership to a health club, exercise classes online or in person, exercise equipment, or athletic training evaluation. A food benefit can range from home-delivered meals to a grocery allowance.

Several commissioners expressed frustration with the lack of standardization in benefit categories and the absence of transparency for beneficiaries to know what benefits a plan actually offers when they sign up.

"Clearly, we need to know how these dollars are being spent and what value they're delivering," said commissioner Cheryl Damberg, PhD, MPH, director of the RAND Center of Excellence on Health System Performance in Santa Monica, California. She suggested Medicare could offer incentives to plans for submitting more complete encounter data that shows more precisely what services were provided, "or [they would] possibly face a penalty for incomplete submissions."

Since Medicare pays MA plans a flat monthly rate based on an enrollee's health risk score rather than reimbursing for specific service claims, it's hard to know how those Medicare dollars are spent.

Scott Sarran, MD, MBA, founding chief medical officer of Harmonic Health in Cook County, Illinois, suggested that these supplemental benefits should come along with some evidence that they improve outcomes. For example, he said, beneficiaries could answer a survey similar to the Consumer Assessment of Healthcare Providers and Systemsopens in a new tab or window (CAHPS) to attest whether the MA plan's dental service helped them address concerns with their teeth, or if their vision benefit improved their sight.

One thing missing from the report is that for many benefits, the enrollee has to pay the bill upfront and then get reimbursed, said commissioner Gina Upchurch, RPh, MPH. Upchurch is executive director of Senior PharmAssist, a Durham, North Carolina nonprofit that counsels seniors on Medicare benefits. In addition, the reimbursement can vary depending on the service and the type of plan, she said. Sometimes the enrollee has to get service from a specific network of providers to get the advertised discount.

As a counselor with the federally funded State Health Insurance Assistance Program, (SHIP), Upchurch checks the Medicare Plan Finder for her clients to learn what benefits are offered. But there, you see just a check mark next to the general benefit category -- for example, "Fitness." "You have to have access to the web, digital literacy, you know, to find these things. They're buried. ...It's impossible really, when you're counseling people, to be truly informed about benefits, to make decisions, because there's so much variance," Upchurch said.

Commissioner Larry Casalino, MD, PhD, of Weill Cornell Medical College in New York City, echoed her concerns. He said he thinks a lot of MA enrollees aren't aware of their plan's supplemental benefits.

"A bigger problem is they're hard to understand. They're hard to use, and often very limited. Can you actually get behind the check mark, for dental or vision, and see who can give it to you? How many times can they give it to you? What's the network? Is there prior authorization? ... It's just too complicated to figure out, even for someone who can use the internet."

Just indicating a benefit with a check mark, he said, "is kind of ridiculous."

https://www.medpagetoday.com/publichealthpolicy/medicare/115083