Value-based care leaves much to be desired in outcome for patients, providers
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Value-based care is a leading platform of the American Academy of Orthopaedic Surgeons. This prominent platform reflects the growing presence of the programs in the U.S. health care system.
Governmental and orthopedic leaders have assured us that value-based care is here to stay, and we all need to be part of the process to improve quality care at reduced costs. One of the more dominant programs developed by the federal government within the framework of value-based care is Medicare Advantage. Medicare Advantage was introduced in its current form in 2003 allowing private companies to administrate the plan with the goal of using private-sector efficiencies to reduce the overall cost of care without sacrificing quality or value. However, allowing for-profit, third-party publicly traded insurance companies to administer the program may reflect the idiom, “The fox guarding the hen house.”
Growth of Medicare Advantage
The growth in Medicare Advantage during the last decade has been remarkable, with one-half of all Medicare-eligible beneficiaries on a Medicare Advantage plan. In simple population terms, the Medicare expense per person was estimated at $10,000 per year or $100,000,000 per 10,000 patients. With previous estimates that up to one-third of health care in the United State is unnecessary, the hope was that $20 to $30 million per 10,000 lives could be saved without compromising care. Unfortunately, it appears that the private companies administering the Medicare Advantage plans may have used the potential savings as increased revenue and profit margins.
Medicare Advantage is particularly attractive to patients on the surface because it covers medical costs and other benefits not typically included in traditional Medicare plans, such as vision, hearing and dental care. Additional theoretical advantages include better care coordination through managed care networks, a greater emphasis on preventative care and the introduction of competition among various private insurance companies and systems that administrate Medicare Advantage.
Unfortunately, recent evidence suggests the administrators of Medicare Advantage may have perverted these incentives, thus resulting in a record number of denials of care, an overwhelming preauthorization process with allegations of artificial intelligence methods tilted toward denial, as well as nonprocedural care with limited effectiveness. There is also no evidence the program has provided any savings. According to an October 2023 report from Physicians for a National Health Program, Medicare Advantage was estimated to have “overcharged taxpayers by a minimum of 22% or $88 billion per year, and potentially by up to 35% or $140 billion.” In its March 2023 report sent to Congress, the Medicare Payment Advisory Commission estimated Medicare Advantage was going to cost 6% more per beneficiary than traditional fee-for-service Medicare beneficiaries in 2023.
There has been increasing outcry and lingering questions not only about the failed savings, but also the reduction in quality care. As such, health care systems and providers have opted out of Medicare Advantage.
Challenges
Once Medicare Advantage allowed private insurers to be involved, several challenges for patients and health care providers developed. Unlike traditional Medicare, patients with Medicare Advantage usually have a restricted network of physicians and health care systems. Most Medicare Advantage patients must have prior authorization and referrals from their primary care physicians to see specialists or have needed specialty care.
The prior authorization programs have received so much criticism that CMS recently instituted reforms to streamline the prior authorization process for Medicare Advantage. The final rule, which went into effect Jan. 1, 2024, states, “coordinated care plan prior authorization policies may only be used to confirm the presence of diagnoses or other medical criteria and/or ensure that an item or service is medically necessary.” This broad statement may allow other methods to be developed around the reforms to accomplish the same outcome. State governments are also getting involved to curtail the rapid growth of prior authorization and associated denials of care.
While Medicare Advantage programs attract members with low or no premiums, they usually have higher out-of-pocket costs than traditional Medicare. Although there is only one traditional Medicare program, there are many different Medicare Advantage programs in every region. Each regional program may have a different emphasis on preventative care and management of chronic conditions and may vary the available coverage annually. Patients and providers need to carefully review the benefits and coverage of the Medicare Advantage programs each year.
Impact on orthopedics
The increasing enrollment in Medicare Advantage will impact orthopedic surgeons. Since they are managed care plans by private, for-profit insurers, the care provided by orthopedic surgeons is typically considered a cost center. Methods to reduce the cost of orthopedic care to Medicare Advantage are present today with the challenges of preauthorization, the steerage to nonsurgical care that may have less evidence-based benefits than surgical care, narrow networks to create surgical care backlogs and alternative payment methods, including bundled payment plans which are value-based payment methods to reduce the cost of overall care for procedures such as lower extremity joint replacement.
Medicare Advantage plans heavily emphasize site of service, driving as many surgical cases as possible into ASCs. Maximizing the site of service programs is associated with a significant reduction in cost for Medicare Advantage. However, the administration and shareholders of the insurance company will realize the savings and profit, not the providers and patients. The providers are often reimbursed at traditional Medicare payment unless part of a multispecialty clinic where internal negotiations are needed to ensure that even this reimbursement amount is a baseline payment to the surgeon. Fortunately, at this time, there is no evidence that this process decreases the quality of care. This is most likely due to the environment of joint replacement and those orthopedic surgeons who have specialized in this arena.
Understand macroeconomic forces
In theory, value-based care is our future. Yet, in practice, there is much to be desired in the outcome for patients and providers. Only 1% of orthopedic surgeons have opted out of Medicare and Medicare Advantage programs, suggesting we believe these programs are essential to our private practices and health care employers.
If we intend to continue to provide high-quality care at a reasonable cost, we need to understand the macroeconomic forces impacting our ability and financial stability to practice orthopedics at the level we want for us and our patients. We need to strongly consider methods, such as political activism and patient advocacy, to positively impact the development of value-based care programs.
- References:
- https://www.beckershospitalreview.com/finance/hospitals-are-dropping-medicare-advantage-left-and-right.html
- https://www.cms.gov/newsroom/fact-sheets/2024-medicare-advantage-and-part-d-final-rule-cms-4201-f
- Physicians for a National Health Program. Our Payments Their Profits: Quantifying Overpayments in the Medicare Advantage Program. Available at: https://pnhp.org/system/assets/uploads/2023/09/MAOverpaymentReport_Final.pdf. Accessed Jan. 3, 2024.
- Medicare Payment Advisory Committee. Report to the Congress: Medicare Payment Policy. March 2023. Available at: https://www.medpac.gov/wp-content/uploads/2023/03/Mar23_MedPAC_Report_To_Congress_SEC.pdf. Accessed Jan. 3, 2024.
- For more information:
- Anthony A. Romeo, MD, is the Chief Medical Editor of Healio | Orthopedics Today. He can be reached at Healio, 6900 Grove Road, Thorofare, NJ 08086; email: orthopedics@healio.com.
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