Half of Medicare beneficiaries, about 30 million people, are enrolled in Medicare managed care plans such as Medicare Advantage (MA). And increasingly those plans are offering modest, but important, non-medical services to older adults living at home.
These supplemental services are the only long-term care-type benefits most seniors will receive through Medicare. The assistance may include anything from meal and prepared food deliveries to transportation, personal care, and home modifications.
Long-term Care Lite
Don’t confuse these MA benefits with long-term care insurance. They usually come at no extra cost to beneficiaries but their value is extremely modest, averaging well below $50 monthly and perhaps as little as $10, according to a new Government Accountability Office report. On the other hand, MA supports can be fully integrated with the plan’s medical care. That could be a major advantage, especially if the benefits are expanded. For now, think of these services as long-term care lite.
Plans are increasingly interested in offering these extra benefits. In 2020, the first year they were allowed, only about 600 plans offered them. This year, more than 2,200 of 4,000 plans are doing so, according to an analysis by the consulting firm ATI Advisory.
Until 2019, plans could offer only limited supplemental services such as vision care, hearing aids, and gym memberships. But a 2018 law called the CHRONIC Act allowed insurers to expand those additional benefits. Special Supplemental Benefits for the Chronically Ill include services such as food delivery and transportation. New Primarily Health-Related Supplemental Benefits may provide adult day programs, caregiver support, and home-based palliative care.
While plans are allowed to charge additional premiums for these services, few do. Instead, they use government bonus payments that are supposed to reflect quality and cost savings. But those rebates are controversial and averaged about $164 per member per month in 2022, according to the Commonwealth Foundation. Plans devote most of that money to the most popular supplemental benefits such as the gym memberships and vision care.
In 2022, about 60 percent of all MA enrollees were covered by just three insurers, United Healthcare, Humana, and Blue Cross Blue Shield. But many of these extra benefits are more likely offered by smaller MA plans.
For example, while more than 900 plans are providing food deliveries this year, those plans enroll only about 13 percent of beneficiaries. The number of members actually receiving those benefits is far lower since most MA enrollees are too healthy to be eligible.
Why would plans offer these extra benefits?
Hearing aids and gym memberships are effective marketing tools. Consumers demand them and more than 90 percent of plans offer them, according to the Kaiser Family Foundation. And since consumers have many MA plans to choose from, insurers can’t be left behind.
Supportive services are different. On one hand, insurers may be reluctant to offer them because they may be most attractive to those who already need this assistance, which may drive up plan costs.
But that risk can be offset by a significant financial benefit. The federal government pays plans a fixed amount every month to provide all necessary care for their members (the base amount averages about $1,000). But a plan will easily burn though that payment if a member needs a hospital stay.
If it can limit its medical costs by offering supports and services, it can keep more of that government payment. For example, some researchers estimate as many as half of hospitalized older adults are malnourished when they are admitted. Imagine the cost savings if plans could reduce those admissions by providing relatively low-cost food or prepared meals to their members.
MA plans have refused to disclose much financial or quality information about these benefits. And, remarkably, Congress never required plans to make data available even to government regulators. Still, we may be able to learn something just by looking at how these benefits are being offered.
For example, ATI found the number of plans offering food deliveries has increased nine-fold since 2020, from 101 to 929. In-home support services such as personal care aides are the most common benefit, offered by 1,091 plans this year, a more than four-fold increase from 2020. That suggests these benefits are cost-effective for the plans and attractive to members. It may even improve patient well-being, though we don’t know that for sure.
At the same time, the number of plans offering adult day services fell from 84 to 41 and the number offering therapeutic massage dropped from 221 to 187. This may mean that members were uninterested in these services. Or it could mean the return on investment to the plans was low, or even negative.
In Congress, Senate Finance Committee Chair Ron Wyden (D-OR) is looking at ways to enhance CHRONIC benefits. Other Democrats want to expand such supports to those enrolled in traditional Medicare. For now, these extra benefits remain a real-world experiment. With better access to plan data, we could learn a lot about the health-related and financial benefits of these supports and services.