What Types of Health Plans Enroll More Seriously Ill Members?

Seriously ill populations tend to enroll in health plans that are less restrictive and that boast broader networks, a recent American Journal of Accountable Care (AJAC) study found.

The AJAC study looked at seriously ill populations in California to shed some light on demographic information.

“This type of state-level examination can help inform national discussion and future analytical work by showing key trends in serious illness, identifying where further work is needed, and clarifying where policy priorities should focus going forward,” the researchers hoped.

Overall, severe illness was more common among populations over the age of 65 and more common among individuals on a Medicare plan.

The rate of severe illness was not significantly different between younger and older populations on Medicare fee-for-service and Medicare Advantage plans. The researchers attributed this to the fact that anyone younger than 65 on these plans would likely have end-stage renal disease or a permanent disability to qualify.

On the whole, severe illness was significantly lower in commercial plans. The distinguishing factor on these plans was age, regardless of whether the member was on a preferred provider organization or health maintenance organization plan.

Other health plan factors that attracted a higher rate of seriously ill members included:

• How restrictive the plan’s policies were
• How broad the network was
• Whether the plan offered access to a hospice benefit

That third factor motivated some members to migrate from Medicare Advantage to Medicare fee-for-service in order to receive the hospice benefit.

While it is common knowledge that those with severe illness will increase healthcare spending, the researchers noted that these members do not typically use different, more expensive services than the average member.

Instead, frequency of utilization was the factor that boosted healthcare spending for the seriously ill.

The most commonly filled prescriptions were similar for both members with serious and with non-serious conditions: chronic disease management drugs. However, seriously ill members spent more on these drugs because they had a higher number and range of prescriptions and used more costly drugs. Hospitalizations and readmissions were also higher for the seriously ill.

The researchers urged policymakers to reform payment models with the seriously ill in mind.

“Our analysis provides a tool that CMS and other states could use to target, benchmark, and evaluate their serious illness initiatives,” the researchers concluded. “Future models could build on broader payment reform efforts to address long-term and expensive chronic care needs.”

This study provides leverage for payers trying to get a clearer perspective on the seriously ill population.

“Given the growing recognition of the need to improve care for individuals with serious illness, who frequently receive fragmented care of varying quality that does not reflect their goals, multiple payers have launched various serious illness programs,” the researchers began.

“However, most of the evidence driving these policies comes solely from the Medicare fee-for-service (FFS) program, largely due to restricted access to MA and commercial insurance claims data.”

Because of the lack of data access, payers, providers, and policymakers only have a restricted perspective on how to create population health management strategies for seriously ill members.

Achieving a better understanding of this population’s experiences is important both to improve patient outcomes and because, historically, members with severe illnesses accrue higher costs.

Payers have reacted to the challenges of serious illness by creating supplemental benefits for their Medicare Advantage members, such as adult day care programs, and palliative care programs for members in their commercial lines of business.

A previous study by the Duke-Margolis Center for Health Policy illuminated both the strengths that Medicare Advantage plans have in tackling serious illness as well as the challenges that they face in tailoring benefits for these populations.

“The Medicare Advantage market is a fertile testing ground for new care delivery models for people with serious illness,” said Robert Saunders, PhD, research director at the Duke-Margolis Center for Health Policy and one of the Duke study’s co-authors.

“The program’s capitated payment structure encourages new approaches because plans share in cost savings, earn bonus payments, and receive rebates (that they can use to offer enhanced benefits or reduce member cost sharing) if they are able to reduce costs while maintaining or improving the quality of care delivered, as measured by Medicare’s Star Ratings program.”

However, plans often fail to serve rural communities due to low prevalence of providers in appropriate specialties, such as palliative care, as well as low community resources, difficult relationships with community-based organizations, and various social determinants of health barriers.

“The bar is set high for offering new supplemental benefits but progress is being made,” said Saunders. “Designing and implementing new supplemental benefits, including for patients with serious illness, requires rigorous evidence for how they will impact clinical care quality, the health and quality of life of enrollees, and overall health care costs.”