New Care Innovations Led by Medicare Advantage

It is an exciting time in Medicare as new innovations in care delivery are being driven by value-based care led by Medicare Advantage.

This progress was recently enhanced further by Congress and the administration to strengthen Medicare Advantage to expand these innovations to address care for older adults, particularly those with chronic conditions or special needs. Insurers and providers are looking to capitalize on the recent policy changes to enhance integrated delivery systems to meet the needs of high-risk, high-need individuals and address social determinants of health to improve outcomes.

This new dynamic was evident at the National Medicare Advantage Summit recently in Washington that brought together a broad spectrum of health care stakeholders — including insurers, providers, health systems, primary care groups, aging service agencies, advocacy organizations, researchers and business leaders — to discuss the changing landscape for Medicare Advantage.

Their energy and commitment to the future of health care was palpable and exciting. Top of mind was the administration’s recent decision to expand the definition of supplemental benefits covered in Medicare Advantage and the inclusion of much of the CHRONIC Care Act in the Bipartisan Budget Act. Many Medicare stakeholders are envisioning new possibilities to achieve better health outcomes with patients granted by these new flexibilities and supplemental benefits.

The fact is Medicare Advantage insurance plans and providers are seizing the opportunity to enhance integrated delivery systems to meet the needs of high-risk, high-need individuals and address social determinants of health to improve outcomes. New partnerships with community organizations are being made; innovative technology is becoming integral to improving care delivery, and entrepreneurs are creating new businesses to fill gaps in the care system. Medicare beneficiaries are responding to these changes in care delivery by choosing Medicare Advantage in strong numbers.

Medicare Advantage is uniquely structured to pay providers for comprehensive, patient-centered care models, often delivered by a primary care team that results in better care coordination. The identification of high-need patients, early intervention and care management are important elements of patient care that Medicare Advantage insurance plans through the capitated payment framework are able to assist providers and patients. These changes in care delivery rely on a strong focus on primary care, risk stratification and connecting the right providers with the right patients in an integrated system — all of which result in fewer ER visits and fewer avoidable hospitalizations.

In Medicare Advantage, the government pays health plans a capitated (monthly) fixed, prospective amount to cover care for enrollees, including all Part A and Part B services (hospice is excluded). Therefore, the payment amount remains the same regardless of the volume of services enrollees receive.

Medicare Advantage relies on risk adjustment for each individual to account for anticipated health care costs for enrollees based on health status — meaning insurance plans are paid more for taking care of sicker patients. This capitated structure creates incentives for plans to better manage enrollees’ health care, including access to disease management programs, care management services, and a focus on primary care to prevent avoidable and costly visits to the emergency room or hospitalizations.

Traditional Medicare pays providers per service delivered, and providers do not take on financial risk for care provided. Medicare Advantage health plans and providers are at-risk for the costs of caring for each beneficiary. Capitated payments incentivize high-value care that is focused on preventing long-term health consequences and costs. Traditional Medicare payments incentivize a higher volume of services.

With a more flexible payment structure, Medicare Advantage can offer providers and patients tailored services to meet patients’ needs, with appropriate providers and at appropriate settings. Aligning these incentives enables providers to think creatively about how to best deliver care to meet patients’ needs and improve outcomes.

The prospective nature of Medicare Advantage payment also allows organizations to invest in the infrastructure needed to engage in population health management by executing effective care management, new communication avenues and data analysis to identify high-risk patients who need more attention.

Medicare Advantage is proving that we can be smarter in the way we finance and deliver care for older adults and those with disabilities and achieve quality care at a reasonable cost. Medicare Advantage is having a significant, positive effect on care for Medicare beneficiaries and may well have an impact on improving health care for everyone.


Allyson Y. Schwartz is president and chief executive officer of the Better Medicare Alliance and is a former U.S. representative from Pennsylvania.

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