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Saving Medicare Advantage the Easy Way

Al Lewis

Brokers who enroll senior citizens in Medicare Advantage (MA) plan often make more on those members than the health plans themselves.  Up to $500 can be spent on a broker fee by the health plan, contributing to a total member acquisition cost which can exceed 10% of the premium dollar.  Even if Medicare Advantage plans can deliver the actual health benefit at a considerably lower cost than Medicare Fee For Service (FFS), it is possible that the entire savings could be consumed by member acquisition costs.

These costs are a tax on Medicare as a whole, a tax whose existence becomes simply unsupportable when the dire forecasts of Medicare solvency are considered.  And an unnecessary burden on health plans as we enter an era in which cutbacks are likely.

The solution is easy enough.  Where MA is available, make Fee For Service an Opt-Out rather than something which has to be “sold.”  When the benefits of both FFS and the various MA plans are laid side by side and people are told that they can simply select a plan from the chart or else complete a lot of paperwork to go FFS, more people will select the MA plans without a broker than would select those plans with an expensive broker if they are put in FFS originally and need to be “sold” to get into an MA plan.

Since so much money is being saved to the system, a bonus of some type could be given to people who select health plans.  Better to pay the individuals than the middlepeople.  Or, $100 could be allocated to an independent, unaffiliated help line to answer questions and guide a decision.

Excluding the bonus, this “opt-out” approach is not unlike the Medicaid health plan approach today.  It is actually kinder and gentler, because in Medicaid people are often not given an option of FFS.  And yet, no one hears an outcry from Medicaid beneficiaries about constraints on their health care. 

Further, there need be no concept of “renewal,” which currently also generates a broker fee.  People can stay in the plans as long as they like.  If they want to change plans or go FFS, they can take that initiative themselves.

Yes, there is a slight inconvenience to people who want to stay in FFS.   But most MA plans offer comparable or better benefits at a lower cost than FFS and most doctors who accept Medicare assignment are also in many MA health plans.  The inconvenience to some people is far outweighed by the savings to the system as a whole, which creates the bonus opportunity.

Al Lewis is credited with having  “invented disease management” by many observers, including everybody's favorite: Google  His creative ideas blog, which covers all policy disciplines, offers a $1-million prize for the first idea which becomes national policy.

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Savings Accounts RatesanonTyler WestDr StevenJoe Green Recent comment authors
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Savings Accounts Rates
Guest

There is an incredible amount of regulation in MA. If you don’t believe me, you should look at all the certification that is required by all brokers who offer these plans. Depending on the county that a MA member resides in, they will recieve upto $800 per month. That is alot. It is a difficult issue

anon
Guest
anon

Tyler most MA plans have a D component that has a much better selection of meds then the equivalent medicaid plan. The MA plans use the D componant as a significant selling point…..a loss leader if you will. the MA plans cover additional management services and benefits such as vision, hearing aids and medical transport that M/M do not. Finally, rarely will a specialist take a new M/M patient, both the employed physicians and indigent care clinic associated with our local NFP hospital won’t even if the private physicians will (for now) so the best arguement is that an MA… Read more »

Tyler West
Guest

This is an intresting blog. Not all your facts are right, as mentioned earlier. You where off by $100 on brokers commissions for MA. There are alot of brokers out there that do a very good job finding plans for their clients that best meet their needs. We don’t get paid for nothting. I guess what ever sector you are in could cut their cost if they just cut your job out too! What a foolish statement by you. I am neither a proponent for MA nor a detractor for MA. I see their obvious flaws, and yet, I see… Read more »

Dr Steven
Guest

Make Fee For Service an Opt-Out, call MA help line.
medical coding training

Joe Green
Guest
Joe Green

I have a Medicare Advantage Plan. It is run by a Non-Profit Company that was started by Seniors to help Seniors. This plan seems to be run better than any I have be involved with. I am in good health and don’t need to doctors but one or twice a year.
I have seen too many seniors and people on Medicad shop doctors for illnesses that don’t exist or really don’t need a doctor.

Luke Burton
Guest
Luke Burton

Multiple Medicare Supplement Quotes are available online at http://www.lowcostmedigap.com

Skumar
Guest

Yes I agree with Lewis, its completely true and it has to be taken care.

Nate
Guest
Nate

Sam, “Seeing the vehemence with whcih brokers are defending their turf makes me think it’s even a more profitable business than I feared” Does this logic apply both ways or only when smearing people you disagree with? Those wishing to abolish the broker role and “reform” our healthcare system have been attacking with equal if not greater vehemence, do you question their profit motive? I personally defend the role of brokers because they are all sterotyped and disparaged when most truely have the best interest of their client at heart and because the majority of the arguments against them are… Read more »

Sam
Guest
Sam

I follow these stocks and this debate and a numebr of thigns are perfectly obvious (1) The data can be interpreted multiple ways. Humana’s acquisition cost as a % of premium is NOT THE SAME as their acquisition cost for the first year of members who come through brokers, duh. (2) FFS is only cheaper than MA because of the rural subsidy, which is not relevant to this question (3) Seeing the vehemence with whcih brokers are defending their turf makes me think it’s even a more profitable business than I feared (4) Obviously an opt-out would work, just like… Read more »

Margalit Gur-Arie
Guest

LOL. That should be a perfect solution, Nate. It would save billions to the healthcare system, assuming your toss is high enough….

Nate
Guest
Nate

we draw a circle on the ground with each MA plan represented by a slice.
We then toss the seniors in the air and which ever slice they fall in is the plan they are enrolled in.

Margalit Gur-Arie
Guest

OK gentlemen, if you are almost done trading insults, can somebody explain to me how will this “opt-out” arrangement work? There are multiple MA plans in any given region and multiple companies competing for enrollees, so which MA plan are you going to automatically sign a person that turns 65 with? Do they have a say in that assignment?

Nate
Guest
Nate

Actually I have never in my life made $0.01 off MA. I use to make some fairly decent money administering Medicare Supplements but that has been a year or two. So no I have no financial incentive to advocate for MA. I just want to keep the facts strait, as the CBO says HMOs in MA on a risk adjusted basis are 3% more efficient then Medicare FFS. The Self funded plans I administer are more efficient then Medicare. If cost effectivness is a concern Medicare for all is obviously not the answer. You need a carrat to suck people… Read more »

Matthew Holt
Guest

Nate, I didn’t say you were wrong about the total “benefits” being given via MA. And I dont really care about those poor minority seniors that AHIP trots out whenever their money train is threatened. I’m interested in the deal for the taxpayer…and it’s been clear for 15 years plus that the taxpayer is getting a lousy deal out of private plans in Medicare. There are NO overall cost savings and the additional costs, whether they’re going to insurer’s profits or costs of sale or extra benefits to beneficiaries, (and it’s clearly not just to the latter) are a bad… Read more »

Loren Camp
Guest

I’m one of these awful brokers that Mr. Lewis talks about and I’m sorry that he has such a low opinion of what many of us do. I think his whole attitude is summed up in the beginning of his third paragraph where he objects to plans being “sold.” This of course implies something awful is happening. Now I’m certainly not well versed enough in the specifics of Medicare advantage policy to determine what is the correct reimbursement rates for these plans and it does appear from what I read that there are some problems that need to be addressed.… Read more »