By Alicia L. Cooper, M.P.H., and Amal N. Trivedi, M.D., M.P.H.
The New England Journal of Medicine, January 12, 2012

This study examined the consequences of adding a fitness-membership benefit on the self-reported health status of enrollees in Medicare Advantage plans. Using a quasi-experimental design, we found that persons enrolling in plans after the addition of a fitness-membership benefit reported significantly better general health, fewer limitations in moderate activities, less difficulty walking, and higher PCS scores than did persons who enrolled in the same plan before the fitness benefit was added and in matched control plans that never offered a fitness benefit. These patterns persisted in the analyses of 2-year follow-up responses for all measures except self-reported general health. Our findings suggest that there is an association between the adoption of fitness-membership benefits in Medicare Advantage plans and the enrollment of healthier Medicare beneficiaries.

Risk-adjusted payments are designed to reduce incentives for plans to avoid high-cost patients. However, the enhanced Medicare risk-adjustment model has the power to explain only 11% of the total variation in health spending. Furthermore, the model overpredicts costs for persons in good health and underpredicts costs for persons in poor health, yielding overpayments for healthy enrollees and underpayments for less-healthy enrollees. Therefore, the continued limitations of the CMS payment model may not discourage Medicare Advantage plans from engaging in risk-selective activities. Our findings are consistent with the notion that Medicare managed-care plans have continued to selectively market their benefits to healthier beneficiaries, even after the improved risk-adjustment program was instituted.

http://www.nejm.org/doi/full/10.1056/NEJMsa1104273?query=TOC#t=articleTop

Comment: 

By Don McCanne, MD

This study further confirms what we have known all along – that private insurers selectively market to the healthy, further cushioning their profits by being paid at rates for those with only average health. Although risk adjustment has been introduced to correct overpayments due to their use of favorable selection, the insurers have found devious ways to use risk adjustment to further expand their profits, even though technically prohibited. It is the nature of private insurers to always work the system to their own advantage, and that will never change.

How many times do we have to say it? It is time to dismiss the private insurers and establish our own single payer national health program in which the benefits accrue to the patients/taxpayers and not to the expensive, intrusive, wasteful insurance intermediaries.

Fitness Memberships and Favorable Selection in Medicare Advantage Plans

By Alicia L. Cooper, M.P.H., and Amal N. Trivedi, M.D., M.P.H.
The New England Journal of Medicine, January 12, 2012
This study examined the consequences of adding a fitness-membership benefit on the self-reported health status of enrollees in Medicare Advantage plans. Using a quasi-experimental design, we found that persons enrolling in plans after the addition of a fitness-membership benefit reported significantly better general health, fewer limitations in moderate activities, less difficulty walking, and higher PCS scores than did persons who enrolled in the same plan before the fitness benefit was added and in matched control plans that never offered a fitness benefit. These patterns persisted in the analyses of 2-year follow-up responses for all measures except self-reported general health. Our findings suggest that there is an association between the adoption of fitness-membership benefits in Medicare Advantage plans and the enrollment of healthier Medicare beneficiaries.
Risk-adjusted payments are designed to reduce incentives for plans to avoid high-cost patients. However, the enhanced Medicare risk-adjustment model has the power to explain only 11% of the total variation in health spending. Furthermore, the model overpredicts costs for persons in good health and underpredicts costs for persons in poor health, yielding overpayments for healthy enrollees and underpayments for less-healthy enrollees. Therefore, the continued limitations of the CMS payment model may not discourage Medicare Advantage plans from engaging in risk-selective activities. Our findings are consistent with the notion that Medicare managed-care plans have continued to selectively market their benefits to healthier beneficiaries, even after the improved risk-adjustment program was instituted.
http://www.nejm.org/doi/full/10.1056/NEJMsa1104273?query=TOC#t=articleTop

This study further confirms what we have known all along – that private insurers selectively market to the healthy, further cushioning their profits by being paid at rates for those with only average health. Although risk adjustment has been introduced to correct overpayments due to their use of favorable selection, the insurers have found devious ways to use risk adjustment to further expand their profits, even though technically prohibited. It is the nature of private insurers to always work the system to their own advantage, and that will never change.
How many times do we have to say it? It is time to dismiss the private insurers and establish our own single payer national health program in which the benefits accrue to the patients/taxpayers and not to the expensive, intrusive, wasteful insurance intermediaries.