Factors Influencing Medicare Advantage Plan Departures

Over half of older Americans receive Medicare coverage through Medicare Advantage (MA) plans, yet many opt to switch plans or revert to traditional Medicare during the annual Open Enrollment period.

Researchers have struggled to obtain data to comprehend the motivations behind these changes, which significantly impact federal Medicare expenditures as well as individual health outcomes. A recent study published in Health Affairs sheds light on the factors that prompt beneficiaries to either switch MA plans or abandon them altogether.

The study reveals that barriers to accessing necessary care and dissatisfaction with the quality of services are more influential in deciding to switch plans than financial considerations. However, access issues are a predominant reason for beneficiaries transitioning to traditional Medicare.

Individuals reporting poor health status experience higher rates of dissatisfaction regarding access to care, leading to more frequent plan switches. Geoffrey Hoffman, Ph.D., the lead researcher and an associate professor at the University of Michigan's School of Nursing, emphasizes that those enrolling in MA plans with lower star ratings are also more inclined to switch plans. The star rating system, which evaluates plans based on various metrics including participant feedback, serves as a useful tool for beneficiaries when selecting appropriate coverage.

While the private market for Medicare Advantage is designed to encourage beneficiaries to explore their options as their healthcare needs evolve, the complexities of medical care often mean that individuals must experience the service to determine if a switch is necessary.

The study indicates that beneficiaries dissatisfied with their MA plans were significantly more likely to report challenges in accessing care, as well as dissatisfaction with both the cost and quality of services. Among those surveyed, individuals in poor health were over twice as likely to encounter access issues and dissatisfaction compared to other MA enrollees.

This dissatisfaction with access, rather than cost, drives many beneficiaries to return to traditional Medicare, which offers less restrictive access to healthcare providers. The implications of this trend are significant, particularly for government reimbursements to MA plan providers and funding for traditional Medicare itself. As higher-cost beneficiaries leave MA plans, traditional Medicare is left with the financial burden.

Additionally, beneficiaries transitioning from MA to traditional Medicare may face increased out-of-pocket expenses, particularly if they are unable to qualify for Medigap coverage, which varies by state. This limitation can result in greater financial challenges for those with significant healthcare needs.

The research utilized data from the Medicare Current Beneficiary Survey, which was linked to anonymized information from 3,600 participants who had been enrolled in their MA plans for a minimum of eight months. Special circumstances, such as low-income eligibility or Medicare enrollment due to disability, were excluded from the study to focus on the general population of older adults.

Overall, the findings highlight the critical role that access to care and quality of services play in shaping the experiences of Medicare Advantage beneficiaries, particularly those with significant health needs.