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Medicare Advantage Plans Deliver Quality And Cost Savings Through High-Value Hospital Networks

posted by Mark Hamelburg and Greg Berger

on June 29, 2016

Over 17 million Americans have chosen a Medicare Advantage plan because of the higher-quality care and additional benefits these plans provide. An important factor behind the comprehensive, cost-effective care that is fundamental to Medicare Advantage is high-value provider networks.

The Kaiser Family Foundation (KFF) recently released a report examining variation in hospital networks offered by Medicare Advantage plans. This report raises several important issues but largely ignores the quality of care and cost savings that plans deliver to beneficiaries through high-value networks.

Using widely recognized, evidence-based measures of provider performance, Medicare Advantage plans establish high-value provider networks to improve both health care quality and efficiency. Plans develop and maintain these networks through ongoing evaluation of provider performance, assessment of resource use, referrals to other high-performing providers, and health information exchange with other providers caring for their members. They also use these strategies to offer technical assistance to providers in organizing care and provide physicians with decision support tools and ongoing feedback on performance.

Carefully managing their networks, Medicare Advantage plans choose hospitals, physicians, and providers that will deliver quality, safety, and affordability to members. Medicare Advantage plans are held accountable for their performance. Plans that achieve a quality rating of 4 or more stars – which, as KFF found, plans with high-value networks are more likely to do – are eligible for a quality bonus that they use to reduce beneficiary costs and invest in innovative disease and care management programs and other benefits that are improving the lives of the individuals they serve.

The Medicare Advantage program has achieved very high levels of satisfaction, with national surveys finding over 90 percent of enrollees pleased with their quality of care. One of the many benefits Medicare Advantage enrollees value is the wide variety of plan options. This gives beneficiaries the ability to choose a plan contracting with a specific doctor or hospital or select a different plan to better meet their needs. The vast majority of beneficiaries like their plan and keep it year after year: The Medicare Payment Advisory Commission has found 90 percent of Medicare Advantage enrollees remain in their existing plan each year and 98 percent of Medicare Advantage members overall re-enroll in the program annually.

Furthermore, each Medicare Advantage plan is obligated to ensure all covered services are available and accessible to its enrollees. This includes:

  • Extensive network adequacy standards that ensure beneficiary access to a broad range of hospitals, primary and specialty care providers, and suppliers, within a reasonable time and distance;
  • Access to care standards that ensure convenient provider hours of operation and availability of services 24/7 when necessary and avoid inappropriate waiting times for services; and
  • A requirement that the plan arrange for medically necessary care outside of the plan’s network, at in-network cost-sharing, if an enrollee were to require a covered service not available from network providers.

Numerous studies – such as research in Managed Care Magazine and from McKinsey – demonstrate the development of high-value provider networks is a crucial tool that improves quality of care and generates savings for consumers and the overall health care system. As the health care system transitions from volume- to value-based care, Medicare Advantage innovations like high-value networks will continue to be adopted by the fee-for-service Medicare program to help achieve the triple aim of better quality, lower cost, and improved population health.

Mark Hamelburg is SVP of Federal Programs and Greg Berger is Director of Medicare Policy at AHIP.