Structural Inequities in Medicare Advantage – A Growing Cause for Concern

Structural Inequities in Medicare Advantage—A Growing Cause for Concern

From its inception, Medicare Advantage (MA), a program in which private health insurers contract with the Medicare program to provide coverage on a capitated basis, has faced significant criticism that insurers were engaging in cherry picking, a form of favorable selection designed to enroll healthier individuals with fewer health care costs into their plans while encouraging other individuals with higher health care costs to remain in traditional Medicare. In 2007, following earlier efforts to address favorable selection, the Centers for Medicare & Medicaid Services (CMS) introduced star ratings to guide beneficiaries’ enrollment decisions by providing them with information about MA plan performance while incentivizing quality by rewarding highly rated MA plans with bonus payments beginning in 2012. There is growing evidence that Medicare beneficiaries are more likely to select and remain enrolled in MA plans with higher star ratings. Yet, as Gupta et al highlight in their study, structural inequities in access to highly rated MA plans are a growing cause for concern.

In their cross-sectional study using 2023 CMS data on MA plans (including service area and star rating) in 3075 US counties merged with 2020 county-level data on social vulnerability from the Centers for Disease Control and Prevention’s Social Vulnerability Index, Gupta et al found evidence of an inverse association between the social vulnerability of a county and the star ratings of MA plans available to Medicare beneficiaries living there. They found that the most socially vulnerable counties had a higher number of low-rated plans (less than 3.5 of 5.0 stars), a lower number of the highest-rated plans (4.5 or 5.0 stars), and a 0.24-point lower mean star rating across all plans in the county compared with the least socially vulnerable counties. Moreover, the mean star rating decreased monotonically across quintiles of counties as they became increasingly socially vulnerable.

These findings from Gupta et al are consistent with a growing body of evidence suggesting that MA plans are continuing to engage in their longstanding efforts to ensure favorable selection, cherry picking at both the individual level and the community level. For example, compared with White beneficiaries, beneficiaries from racially and ethnically minoritized groups are known to enroll less often in highly rated MA plans (and thus more often in low-rated MA plans). However, this is most likely driven by county-level differences in MA plan offerings rather than individual preferences regarding enrollment decisions, with fewer highly rated MA plans (and more low-rated plans) made available to Asian or Pacific Islander, Black, and Hispanic beneficiaries compared with White beneficiaries. This is particularly troubling given that growth in MA enrollment is now greatest among racially and ethnically minoritized populations and those living in socially vulnerable and marginalized neighborhoods.

— JAMA Network Open, July 23, 2024

Wright, Brad. “Structural Inequities in Medicare Advantage – A Growing Cause for Concern.” JAMA Network Open, 23 Jul. 2024. https://jamanetwork.com/journals/jamanetworkopen/fullarticle/2821394.