Medicare Advantage – and Disadvantage: Program Enrollment Grows Amid Physician Concerns
By Emma Freer Texas Medicine March 2024


Norman Chenven, MD, a family physician and founding CEO of Austin Regional Clinic (ARC), knows it’s not easy to design and operate an effective delivery system that is the optimal mix of quality, patient access, and lower overall costs. 

“But it can be done with the right health plan partners and the right incentives,” he told Texas Medicine. After decades of developing such a system, ARC was poised for success when it first began caring for patients enrolled in Medicare Advantage plans in 2018. 

Unlike traditional Medicare, in which the federal government pays for patients’ care on a fee-for-service basis, Medicare Advantage is an alternative payment model (APM) in which the federal government pays private plans a fixed monthly amount per patient, based on the patient’s medical diagnoses and other factors, such as age, geography, dual eligibility, and health and disability status. 

“The theory behind [Medicare Advantage] is that, if the delivery system is financially incentivized to take responsibility for improving the quality and also managing the costs, then, with the proper planning, care coordination, and resources, you’re going to see improvements,” Dr. Chenven said. 

One way ARC has put this theory into practice is in its diagnosis and treatment of diabetic retinopathy. Previously, the group would refer diabetic patients to an ophthalmologist for a retina scan, knowing that roughly half wouldn’t follow through and at least some would develop the condition, which, left untreated, worsens patient outcomes and drives up spending. 

So, ARC invested in retinal cameras for its primary care clinics; when diabetic patients come in for routine blood tests, clinicians also scan their retinas in hope of diagnosing the condition early. Meanwhile, the group also coordinated with local ophthalmologists, who read the scans and initiate treatment for the patients who need it.  

This new workflow has proven successful, saving patients’ eyesight, minimizing hassle, reducing costs, and creating specialty referrals.  

“It’s a win-win-win,” Dr. Chenven said.  

Medicare Advantage is a paradigm shift away from fee-for-service models because it rewards efforts to keep patients medically stable and healthy, reducing the likelihood that such patients will need to go to the emergency department or be hospitalized. This mandate requires investment in care coordination resources, outreach staff, and active monitoring of the most frail and vulnerable patients.  

Dr. Chenven acknowledges the added effort required of the physicians involved and the growing pains of engineering such a transition. But, he says, when done properly and with a supportive infrastructure, the program can benefit patients medically and physicians financially.  

“The cost of care is, fortunately or unfortunately, becoming the responsibility of the delivery system now,” he said. “It wasn’t our problem in the past. How we in medicine choose to respond to that challenge will affect the future of our profession.”  

An increasing number of physicians are in the midst of responding.  

Enrollment in Medicare Advantage has grown steadily since 2003, when, under the Medicare Modernization Act, Congress incentivized private plans to participate in Medicare and renamed the option Medicare Advantage. Today, more than half of Medicare patients – in Texas and across the U.S. – are covered by the program, a share that grows as high as 72% along the Texas-Mexico border. (See “Medicare Advantage at a Glance,” page 36.)  

This split is poised to widen in the coming years as the Centers for Medicare & Medicaid Services (CMS) has a stated goal to transition all Medicare patients from fee-for-service arrangements to value-based models by 2030.  

Despite its growing popularity among Medicare patients, however, Medicare Advantage is divisive among physicians.  

Supporters tout the program’s affordability and supplemental coverage options, which attract a more diverse patient population than traditional Medicare. Studies also show its relative success in cutting costs associated with certain chronic conditions, even among more at-risk patients.  

Opponents, on the other hand, cite reports showing Medicare Advantage outspends traditional Medicare overall. Some physicians who care for Medicare Advantage patients lament the program’s closed networks and prior authorization hassles. Federal audits of Medicare Advantage plans also have found incidents of fraud, particularly in the area of over-diagnosing conditions that generate higher payments to health plans.  

The Texas Medical Association is focused on resolving these complications for physicians through advocacy and education. 

TMA’s Council on Socioeconomics, along with staff experts, regularly meet with the major private payers to surface common physician complaints, including those about Medicare Advantage plans. Gary Sheppard, MD, an internist in Houston who chairs the council, says the association – which represents more than 57,000 members – has more leverage in these conversations than a small or solo practice. 

“We want to make sure that physicians [and their patients] aren’t being taken advantage of or being burdened because of this shift to Medicare Advantage,” he said. “That’s why we have to talk to [the payers] now and not wait until everyone’s enrolled in Medicare Advantage.”  

TMA’s Reimbursement Review and Recovery Service also goes to bat for member physicians. In 2023, its staff recovered nearly $16,500 in Medicare Advantage payments. 

More recently, TMA convened a Task Force on APMs in May 2022. Dr. Chenven, who co-chairs the task force with David Fleeger, MD, a colon and rectal surgeon in Austin and past TMA president, says its mission is to educate physicians about APMs, including Medicare Advantage, so they can successfully participate in them if and when they choose to do so.  

“We want to be a resource because this stuff is confusing and complicated,” Dr. Chenven said. “And, as with everything in life, there are better and worse Medicare Advantage models, and the outcomes for patients and physicians vary accordingly.” 

The advantages 

Compared with traditional Medicare, Medicare Advantage can offer patients more benefits at lower cost.  

Most Medicare Advantage plans encourage patients to establish themselves with a primary care physician. There is evolving evidence that patients with strong primary care relationships have fewer hospital admissions and emergency department visits.  

“Sometimes, it enhances what Medicare does, and it allows us to do something that Medicare doesn’t,” Dr. Sheppard said. 

Unlike traditional Medicare, most Medicare Advantage plans include prescription drug coverage, and many offer additional benefits, such as vision, dental, and hearing services, according to CMS. Others offer services that address nonmedical drivers of health, such as transportation, meals, and wellness programs.  

The Medicare Advantage patient population also is “substantially more socioeconomically disadvantaged and twice as likely to be nonwhite” than that of traditional Medicare, according to a recent white paper by Inovalon and Harvard Medical School. 

“Socioeconomically vulnerable populations may place greater value on the financial advantages that [Medicare Advantage] plans offer, such as lower cost sharing and reduced ... premiums,” the authors wrote. The same populations “are also less likely to receive retiree health benefits from their former employer, making the comprehensive nature of [Medicare Advantage] – in terms of financial protections and benefits – all the more appealing.”  

Even with a patient population more at risk clinically and socially, Medicare Advantage outperforms traditional Medicare in cutting costs associated with certain chronic conditions.  

A June 2023 Avalere study found Medicare Advantage patients with at least one of three common chronic conditions – hypertension, hyperlipidemia, and diabetes – had slightly higher rates of physician office visits than their counterparts in traditional Medicare, with lower use of high-cost services, such as inpatient hospital stays, post-acute care, and emergency department visits. At the same time, quality results were similar among the cohorts across all three conditions.  

Dr. Chenven says these findings show the benefits of APMs when they invest in preventive care.  

“The best way to keep the cost of care down is to keep people healthy and provide easy access so that medical interventions occur early,” he said. 

Of course, keeping patients healthy is a tall order for physician practices.  

“The way that’s done is by identifying the sickest patients, the most frail and vulnerable patients, and providing them with additional services, whether it’s food as medicine, nursing staff who go to their homes, bringing them in to be seen by the doctor more frequently so that the doctor can ... identify problems before they [get] out control, [or] identifying people at risk [for acute and chronic conditions],” he said. 

The disadvantages  

But Medicare Advantage plans vary, and some are more problematic than others, especially in comparison with traditional Medicare. These shortfalls include narrower networks, difficulty for patients accessing specialty care, prior authorization hassles, and plans’ care denials. Physician concerns about the program have not gone unnoticed, as evidenced by recent regulatory changes.  

“I’m very much an advocate of the concept behind Medicare Advantage,” Dr. Chenven said. “How it’s been administered, however, and whether the physician group has control to make it a more efficient program – that’s more complicated, as everything is in American health care.” 

And many physicians prefer traditional Medicare, which Dr. Sheppard says is more familiar and often easier to maneuver on behalf of patients in need of complex care. 

“Medicare Advantage makes you jump through a lot more hoops,” he said.  

Like other forms of managed care, Medicare Advantage HMO patients generally can only see clinicians who are in network and likely will need a referral to see a specialist; traditional Medicare patients can see any physician or go to any hospital that accepts Medicare, according to CMS. This dynamic can be challenging for specialists, who may prefer that patients have direct and open access to their services.  

Medicare Advantage plans also sometimes delay or deny coverage for medically necessary care that would be covered under traditional Medicare, according to an April 2022 report by the U.S. Department of Health and Human Services’ (HHS’) Office of Inspector General (OIG). This affects patients as well as the physicians who care for them – and who expect payment for that care. 

“Although some of the denials that we reviewed were ultimately reversed by the [Medicare Advantage plans], avoidable delays and extra steps create friction in the program and may create an administrative burden for beneficiaries, providers, and [the plans themselves],” the report states. “Examples of health care services involved in denials that met Medicare coverage rules included advanced imaging services (e.g., MRIs) and stays in post-acute facilities (e.g., inpatient rehabilitation facilities).” 

Other studies indicate that Medicare Advantage spends between 4% and 10% more per patient than traditional Medicare, largely because of differences in diagnostic coding intensity, according to a May 2023 brief by the HHS assistant secretary for planning and evaluation’s Office of Health Policy. 

Medicare Advantage plans are financially incentivized to record all possible patient diagnoses – a phenomenon known as coding intensity – because doing so results in higher patient risk scores as well as higher – or risk-adjusted – payments to the plans, brief authors explain.  

Additionally, a small number of private payers dominate the national Medicare Advantage market, according to an August 2023 Kaiser Family Foundation report. UnitedHealthcare and Humana account for nearly half of all patients enrolled in the program. 

Together, these trends have sparked concerns about the privatization of Medicare not only among physicians but also at the federal level.  

The U.S. Senate Committee on Homeland Security and Governmental Affairs’ Permanent Subcommittee on Investigations tackled the issue at a May 2023 hearing. 

“Major insurance companies who run Medicare Advantage plans are making record profits ... in part because of the denial or delay of care,” U.S. Sen. Richard Blumenthal (D-Conn.), who chairs the subcommittee, said in his opening statement. “Insurers are in effect denying Americans necessary care in order to fatten and pad their bottom lines.” 

The U.S. Senate Finance Committee held its own Medicare Advantage hearing in October 2023, which focused on the “slimy tactics” of “marketing middlemen,” as U.S. Sen. Ron Wyden (D-Ore.), who chairs in the committee, said in his opening remarks. 

Over in the executive branch, CMS issued a new rule in February 2023 that widened its scope to audit Medicare Advantage plans in hope of reducing overpayment and improving the accuracy of diagnostic coding. The agency cited its own audit findings for performance years 2011 through 2013, which found an estimated $650 million in improper payments. 

OIG also issued a toolkit in December 2023, which is intended to help Medicare Advantage plans avoid diagnostic miscoding and to help CMS ensure accurate payments to plans. 

Additional CMS regulatory changes to the program started this year. The regulations will:  

  • Lower the base rate paid to Medicare Advantage plans; 
  • Phase in a new risk-adjustment model to address diagnostic coding intensity; 
  • Streamline prior authorization requirements; 
  • Prohibit certain predatory marketing tactics by Medicare Advantage plans; and 
  • Make it harder for plans to earn certain quality bonuses. 
The agency also has proposed a rule that would further improve prior authorization processes under Medicare Advantage by increasing data sharing and reducing the administration burden for plans, clinicians, and patients, among other provisions.  
Drs. Sheppard and Chenven agree that Medicare Advantage is an evolving and rapidly growing segment of American health care and not all Medicare Advantage plans are alike: When intelligently designed, there are beneficial outcomes for patients and physicians; when poorly administered, physicians and their patients are disadvantaged.  
TMA will continue to monitor and educate its members on this volatile issue.

Last Updated On

April 03, 2024

Originally Published On

February 29, 2024

Emma Freer

Associate Editor

(512) 370-1383

Emma Freer is a reporter for Texas Medicine. She previously worked in local news, covering city politics, economic development, and public health. A native Clevelander, she graduated from Columbia Journalism School and the University of St. Andrews.

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