The Trump Administration and a bipartisan majority in Congress have moved to allow Medicare Advantage managed care plans to offer a wide range of personal services such as home delivered meals,   transportation, and bathroom grab bars—to members who need them. This would be a sea change in the way Medicare has supported older adults with chronic conditions for the past half century. And it has set off a firestorm of controversy.

Surprisingly, few conservatives have objected to the biggest expansion of Medicare benefits since Congress approved the Part D drug program 15 years ago. The criticism comes from the political left and some senior advocacy groups.

The problem is not with the services themselves. Most everyone agrees that providing this assistance has the potential to improve the well-being of frail elders and other Medicare beneficiaries with chronic conditions.  The fight is over who should offer them. And at its heart is the deep distrust many have with managed care.  A nice piece by The New York Times’ Paula Span gives a taste of this battle.

Contradictory objections

Under the new initiatives, MA plans will for the first time have the option of providing these extra services. However, they still will not be available through traditional fee-for-service Medicare.

Thus, critics of the proposals have two somewhat contradictory objections. The first is that managed care organizations (MCOs) will simply pocket the money they get from Medicare and refuse to provide the additional services, especially to their highest-cost members. The second is that MA plans will do such a good job integrating medical and supportive services that the new flexibility will drive more seniors away from traditional Medicare and into the arms of managed care. Currently, about one-third of Medicare beneficiaries are enrolled in MA plans.

These new MA benefits will be available under two initiatives. Under new rules from the federal Centers for Medicare and Medicaid Services, starting next year MA plans will be allowed to provide a wide range of additional services including adult day care, transportation, respite care for caregivers, in-home aides, and safety devices such as grab bars, stair rails, and temporary ramps.

Tailoring benefits

In addition, the MA plans will be able to tailor these benefits to the needs of each participant. Under old rules, MA plans largely were barred from providing non-medical services to their members. And any medical services they provided to one member, they’d have to provide to all.

CMS moved at the same time Congress passed the bipartisan CHRONIC Act, sponsored by senators Ron Wyden (D-OR) and Johnny Isakson (R-GA). CHRONIC allows for an even more ambitious expansion of non-medical services by MA plans as well as funding for telehealth and other benefits.

It is hard to overestimate the importance of this change. It begins to break down a barrier that has been in place since Medicare was established in 1965: Until now, the program has explicitly paid for medical care only. With the exception of hospice, special-needs plans, and some other relatively small programs, it has steadfastly refused to pay for non-medical services. Indeed, Congress explicitly prohibited MA plans from offering social services.


Why have Congress and CMS allowed MA plans, but not traditional Medicare, to offer these benefits? Two reasons, one political and one practical.

The political reason is that while Republicans won’t support an expansion of traditional Medicare, they will back enhanced managed care that they believe offers a better opportunity to control costs. Indeed, it was astonishing that congressional Republicans accepted this historic change in Medicare benefits with no opposition. CHRONIC would never have passed if it expanded all of Medicare.

The more practical reason is the nature of managed care. Medicare pays MA plans a fixed per-member per-month fee. In return, the MCO is fully responsible for the health care of its members. If it can provide that care for less than the fee, it makes a profit. If the cost of care exceeds the fee, it loses money.

Aligned incentives

For MCOs, that margin often turns on the ability to keep enrollees out of hospitals or skilled nursing facilities. This is especially true for those with both chronic conditions and functional or cognitive limitations, whose costs are far higher than those who have chronic disease only.

Because the MCOs are at risk for the health costs of their members, allowing them to potentially lower expenses by providing some modest supports and services makes sense. After all, an MCO may be willing to spend a few thousand dollars on home improvements  if those benefits can reduce the chances an older adult will fall and break a hip, saving tens of thousands of dollars in medical treatment and rehabilitation costs.

That design is fundamentally different from fee-for-service, where providers rarely have financial incentives to lower a patient’s overall expenses. Who will pay for that grab bar if they don’t share in the cost savings from preventing the hip surgery? Medicare has developed some payment models that include such incentives but they remain in limited use.

Mixed results

It won’t always be as simple as buying a grab bar to prevent a hip fracture, of course. The relationship between greater use of supports and services and reduced medical expenses remains unclear. There is evidence that some MCOs will use low-cost providers that don’t always deliver the best care.  And there is evidence that managed care can produce better outcomes for some conditions.

But is distrust of insurance companies enough of a reason for progressives and some advocacy groups to oppose the idea of fully coordinating medical and social care? Would older adults and their families be better off if we continued the disorganized, inefficient care that is so common today?  Or would it make more sense for advocates to work to make sure that managed care delivers the best care possible?

Advocates could, for instance, accept the basic model of integrated care but work to create appropriate quality measures by which MCOs could be measured. It would be a more productive response than just saying no.