A full-spectrum, end-to-end approach to care empowers providers to identify gaps in care and manage plan members more productively. (Photo: Shutterstock)

The nation’s health care system faces a potentially catastrophic challenge: aging baby boomers are creating a significant shift from enrollment in private health insurance to Medicare and driving an unsustainable rate of health care spending. Projections show that national health expenditure growth is expected to average 5.5 percent annually to reach $5.7 trillion by 2026 — higher than the projected increase in Gross Domestic Product (GDP).

Risk-based contracting demonstrates superior clinical outcomes and improvement in mortality for patients, making value-based approaches critical. This is where retirement brokers can play an important role, providing invaluable guidance for retirees making health care coverage decisions that can have serious consequences on their health and financial well-being.

Related: Financial surprises await boomers in retirement

Before jumping in, however, brokers should gain a firm grasp on trends, innovations and helpful solutions in the Medicare Advantage (MA) space.

Growing reliance on MA plans

The nation’s unsustainable rate of health care spending has sparked a growing reliance on MA plans, which provide an alternative to traditional fee-for-service (FFS) Medicare. Currently, MA plans represent 30.6 percent of all Medicare enrollees and 28.9 percent of Medicare’s 2017 gross spending budget.

Individuals can get Medicare benefits from original Medicare or a MA plan, such as a health maintenance organization (HMO) or preferred provider organization (PPO). With the former, the government pays for Medicare benefits. With MA plans, the coverage is offered by private companies approved by Medicare. MA plans provide all Medicare Part A (hospital insurance) and Medicare Part B (medical insurance) coverage.

Optimized MA plans

The most effective MA plans on the market look at the full spectrum of the patient and apply an end-to-end solution. When done effectively and efficiently, and combined with payment reform, this approach enhances care coordination using analytics, in-home care, retrospective solutions and care management to substantially improve outcomes.

Value-based contracting generates cost efficiencies and improves clinical outcomes in MA. To achieve sustainability, MA plans and risk-bearing entities must adopt innovative quality and risk adjustment programs to meet growing demand for effective care strategies. For instance, MA plans can gain clinical insight into risk-adjusting conditions to enhance their traditional analytical platforms.

Inside a risk-adjustment model

Risk adjustment is an actuarial tool used to calibrate payments to health plans based on the relative health of the at-risk populations. If insurers are limited in the extent to which premiums can vary by health status or other factors that are associated with health spending, risk adjustment can help ensure that health plans are appropriately compensated for the risks they enroll.

Brokers should be aware that most claims in fee-for-service Medicare are paid using procedure codes, which offer little incentive for providers to record more diagnosis codes than necessary to justify ordering a procedure. In contrast, MA plans have a financial incentive: The current risk adjustment model was introduced to ensure that their providers record all possible diagnoses because higher enrollee risk scores result in higher payments to the plan.

Here are two examples of how an MA plan can be optimized: A physician record review (PRR) is a two-stage retrospective chart review process from a 1) certified coder and 2) board-certified physician.

A prospective health assessment (PHA) can provide a robust view of members and their care needs. Providers can also rely on PHAs to lay the groundwork for developing more accurate reporting documentation, improving patient engagement and compliance, enhancing disease management, and reducing utilization.

This kind of full-spectrum, end-to-end approach to care empowers providers to identify gaps in care and manage plan members more productively. It also helps health plans that are serving as intermediaries, executing solutions and assuming risk. The upshot of all this is that the plan member reaps the greatest benefit by being guided toward more preventive care and self-management early in the care process.

Understand the most innovative approaches

Value-based contracting can drive utilization patterns and improve clinical outcomes among chronically ill, elderly MA members. One study tested the hypothesis that payer-provider risk contracting promotes high-value care and concluded:

  • In the future, more clinicians will have to bear the monetary risks associated with health care utilization.
  • The MA program provides a unique milieu for investigating provider groups that have either risk-bearing or fee-for-service contracts with private health plans.
  • Full-risk capitation combined with a revenue gainshare agreement sparked a clinical practice transformation at the provider group level, associated with increased office-based care and decreased hospital-based services.
  • The clinical practice transformation resulted in a six percent survival benefit and lowered the hazard of death by 32.8 percent.
  • Value-based contracting benefits all stakeholders of the MA program.

The intervention group’s overall survival rate was 82 percent, and the control group’s was 76 percent. This six percent survival benefit first became apparent at 16 months after the intervention, coinciding with the first year that the intervention group had higher office-based utilization than the control group.

Age provided a natural time-scale for calculating the hazard of death for this elderly population with multiple comorbidities and a higher risk of all-cause mortality. Intervention-group members had a 32.8 percent lower hazard of dying (P <.001). The survival benefit was more apparent among those aged 82 to 96 years. Randomization inference confirmed these survival data, whether time (P <.001) or age (P <.001) was the time scale.

Improved survival is related to and attributable to enhance the Centers for Medicare and Medicaid Service’s (CMS) Hierarchical Condition Category (HCC) data and value-based contracting, which then transform primary care delivery.

Important for brokers to note

CMS recently expanded how it defines the “primarily health-related” benefits that private insurers are allowed to include in their MA policies, with insurers including these extras on top of providing the benefits of traditional Medicare. For example, healthy food, transportation to doctor’s appointments, home delivery of meals and air conditioners for asthmatics represent the type of new benefits offered to Medicare beneficiaries who choose private sector health plans, when the new federal rules take effect. This is great news for MA beneficiaries because it means access to supplemental benefits that will help them lead healthier, more independent lives.


Scott Howell, D.O., MPH & TM, CPE, is chief medical officer for Advantmed.