Today commercial health plans outnumber Medicare Advantage plans, but within the next few years this paradigm will flip. The Silver Tsunami will create explosive growth for Medicare Advantage and expand that market to almost $700 billion. By 2028, Medicare Advantage plans will include about 42% of all Medicare beneficiaries, and payers that can’t effectively manage the over-65 population will become virtually obsolete. But most payers still have a lot to learn about these members, whose needs differ significantly from the needs of the “working well” they cover today. As payers prepare for a Medicare Advantage-driven market and build new processes and infrastructure to serve it, there are many compelling reasons for them to prioritize managing post-acute care. This post explores the top three reasons and provides insight into how insurers can better control cost and quality at the post-acute end of the continuum by gaining access into what has long been a black hole of patient care.
1. Medicare Members Utilize More Post-Acute Care Than Any Other Member Cohort
The majority of Medicare beneficiaries are dealing with at least one chronic condition, and some have multiple comorbidities. They are also likely to suffer from functional and/or cognitive impairment, and as they age, a significant portion have permanent disabilities. In short, their needs differ significantly from members of employer-sponsored plans. For example, the average thirty-year-old female covered by an employer plan will have only one hospitalization during the time she relies on that plan for her care—a 3- to 5-day stay to deliver a baby—and she will return home directly after. The average Medicare beneficiary, on the other hand, may have multiple hospitalizations during the time they are subscribed to their Medicare Advantage plan, and more than 40% of those hospital stays are followed by some kind of post-acute care, whether it’s a stay (or multiple stays) at a skilled nursing home or the support of home health.
2. Post-Acute Care Accounts for 10% of All Medicare Spending
That statistic translates into approximately $60 billion, $20 billion of which is spent in Medicare Advantage. Based on spend alone, no payer going into the Medicare Advantage business can afford to ignore patient activity at this end of the continuum. Tracking and managing post-acute spend is especially important given the way that the government compensates payers for administering Medicare Advantage plans. When they spend less money than the government gives them for their plan’s members, they get to keep the surplus funds—which is why the growth of Medicare Advantage creates such a massive financial opportunity for payers. But on the flip side, when payers spend more than the government has given them, they’re on the hook for the coverage.
3. Post-Acute Care Is Key to Meeting Quality Goals Under Medicare Advantage
Managing spend isn’t the government’s only goal with privatizing Medicare, of course. CMS is also committed to improving the quality of care provided to Medicare beneficiaries through its star rating system. Because Medicare members are such high utilizers of post-acute care, many of the measures that go into the calculation of a plan’s star rating are sensitive to post-acute care. For example, one of the quality measures in the program requires payers to do medication reconciliation within 30 days of a patient’s discharge from the hospital. With their current reliance on claims data that doesn’t come in until six months after a patient event occurs, most payers struggle to do this. Having access to this data in a more timely manner – along with other data related to improving quality measures – provides Medicare Advantage plans a boost in receiving their star ratings bonus.
The financial implications for focusing on post-acute care are clear. The struggle lies in timely, actionable updates on the care members receive in the continuum. In theory, payers should have enough data from claims to determine if post-acute resources are being used appropriately. In practice, however, claims data is outdated and payers often are not even aware that their members are using post-acute care until it’s too late to assess whether the facility they’ve gone to is a fit for their clinical needs—let alone redirect members to alternate care if it’s not.
Fortunately, technology has already been developed to give payers access to real-time data on member activity in post-acute settings to help plans met CMS’ broader goals for quality care, contain post-acute costs and assess the performance of post-acute providers – as well as to guide members to those same high-quality providers.
CMS pays multi-million-dollar bonuses to plans that succeed on the quality front and earn above-average star ratings, so having tools like these will be more of a necessity than a nicety as Medicare Advantage continues to grow. As payers prepare for the upcoming shift in the insurance market, getting visibility into and managing post-acute care must be a top priority.
Learn more about CarePort’s suite of tools that help payers manage post-acute care.