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Specialized Medicare Advantage Plan Saves Money Compared to Traditional Medicare Fee-For-Service Contact: Lindsey Spindle, 202.207.1337,
lspindle@avalerehealth.net
Medicare Advantage (MA) Special Needs Plans (SNPs) are designed to meet the unique healthcare needs of patients who are dually eligible for Medicare and Medicaid, afflicted with severe or disabling chronic conditions, or ill enough to be institutionalized. More than 1.2 million beneficiaries are enrolled in SNPs. Current health reform proposals would lower payments to all MA plans irrespective of plan type or the clinical complexity of the beneficiaries each one serves.
In the new report, Avalere researchers compared Centers for Medicare & Medicaid Services (CMS) payments to one large Special Needs Plan offered by SCAN Health Plan in California to what the government would otherwise spend on care for those individuals via the traditional fee-for-service (FFS) program.
Avalere found that the payments CMS makes to SCAN for these SNP enrollees are substantially less than FFS payments CMS makes to healthcare providers for a similar group of beneficiaries. Using actual payments from CMS to SCAN, the annual cost to CMS for each member enrolled in SCAN’s plan was $1,522 less than annual costs for a comparable FFS beneficiary. That result implies more than $250 million in savings to the Medicare program from SCAN enrollees in 2006 and 2007, combined.
“Changes in Medicare Advantage policy are largely driven by concern over the relative value of MA plans,” said Bob Atlas, chief operating officer of Avalere Health and an author of the report. “This focused analysis points to interesting market-wide questions on whether all MA plans warrant a one-size-fits-all payment reduction policy approach.”
Avalere’s analysis was done using a proprietary model built with SCAN data and government data from 2006 and 2007 that compares the plan’s payments with payments CMS would otherwise make via fee-for-service. It analyzed SCAN’s Legacy Special Needs Plan, a SNP designed for beneficiaries who live at home but qualify for institutional status by having several functional deficits and conditions that require medical supervision, though not all enrollees must or do meet this qualification. The model controls for demographic factors, chronic and acute healthcare conditions, and measures of healthcare utilization.
The report, Comparing CMS Spending for a Special Needs Plan’s Enrollees with Medicare Fee-for-Service, was authored by Bob Atlas, Zeynal Karaca, and Jennifer Kowalski, all of Avalere Health. The research was funded by SCAN Health Plan. Avalere maintained editorial control and the conclusions expressed in its research are solely those of the authors. Avalere Health is an advisory services company whose core purpose is to create innovative solutions to complex healthcare problems. Based in Washington DC, the firm delivers research, analysis, insight, and strategy for leaders in healthcare business and policy. Avalere's experts span 125 staff drawn from the federal government (e.g., CMS, OMB, CBO, and the Congress), Fortune 500 healthcare companies, top consultancies, and nonprofits. The firm offers deep substance in areas ranging from healthcare coverage and financing to the changing role of evidence in healthcare decision-making. Its focus on strategy is supported by a rigorous, in-house analytic research group that uses public and private data to generate quantitative insight. Through events, publications, and interactive programs, Avalere also translates real-time healthcare developments into actionable information. Learn more at www.avalerehealth.net. Return to the News Room.
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