We Need a Better Way to Do Medicare Advantage

Fran Soistman, CEO of eHealth, Inc.

I have spent most of my career in health insurance and worked closely with the Centers for Medicare and Medicaid Services (CMS) for decades. Taking a page from the Hippocratic oath, the government and the health care industry’s first priority is to do no harm, but together we’ve gone beyond that to positively impact Medicare beneficiaries.

The roll-out and expansion of Medicare Advantage is a case in point. CMS and its private sector partners have done tremendous work in bringing a complex product into the service of beneficiaries, and Medicare’s star ratings have improved carrier and provider accountability as well as customer satisfaction. There’s a good reason 51% of Medicare beneficiaries are now enrolled in an Advantage plan.

And yet, in recent years it has become clear that despite good intentions, Medicare’s Annual Enrollment Period is creating high levels of stress and fatigue for beneficiaries. Meanwhile, insurers and distributors are struggling to reorient themselves each year to a constantly shifting regulatory landscape.

It’s time for a national debate on the future direction of Medicare Advantage. To start the conversation, I have a couple of modest suggestions to offer. But first, let’s examine the pain points for both beneficiaries and the industry.

The challenge for Medicare beneficiaries

Imagine that every year, in a single seven-week period, you and everyone in your state had to visit the Department of Motor Vehicles to renew your driver’s license. Millions of people would rush to the DMV at the same time to avoid the deadline. It would be a recipe for chaos, stress, and anxiety - and to what end?

Medicare’s nationwide Annual Enrollment Period is something like that for America’s 70 million Medicare beneficiaries. Between mid-October and early December, they are invited to review their coverage options and enroll in a new Medicare Advantage or Medicare Part D plan – while a small army of insurers, agents, and independent brokers attempts to help them all at once.

Tens of millions of beneficiaries each year receive an “annual notice of change” letter from their current Medicare insurer, which is often challenging to decipher. This letter describes changes to benefits and costs, but it’s not always clear to beneficiaries how these changes will impact them personally.

On top of this, every single one of the country’s 70 million Medicare beneficiaries are inundated from October to December with high-pressure and sometimes misleading sales pitches that target them through television, radio, the internet, telephone, and mail.

The challenge for insurers

It’s only right to put Medicare beneficiaries first in this discussion. Upstream from consumers, however, insurance carriers and their partners encounter obstacles that inevitably impact those they serve.

Conceived to encourage free-market innovation in the cost-effective delivery of Medicare benefits, Medicare Advantage has become increasingly prescriptive. CMS’s annual rule-making process is meant to protect consumers and encourage efficiency, but with broad new rules coming into effect each year, CMS is in effect conducting invasive surgery on the program without giving the patient time to recover.

Insurance carriers scramble for months, expending tremendous resources to interpret the new rules and build or reconfigure reporting system and marketing practices ensuring they stay compliant. Keeping up with CMS costs a lot of money and time which might have been dedicated to innovating and improving benefits for enrollees.

CMS’s unpredictable annual rate adjustments also complicate the financial ability of insurers to effectively deliver the coverage they are mandated to provide, and the restrictive federally-defined Annual Enrollment Period challenges the ability of licensed brokers to provide careful, personal attention to tens of millions of beneficiaries at once.

Two suggestions for a more effective program

The good news is, wherever there is friction in the consumer experience, there is an opportunity for innovation. Here are two suggestions that might help us toward a better way of doing Medicare Advantage.

First, what if we ditched the DMV-style madness of Medicare’s single nationwide Annual Enrollment Period? Instead, Medicare beneficiaries could have a personal, month-long open enrollment period each year, timed to coincide with their birthdays. Staggered enrollments throughout the year would save everyone from the panicked rush in late November and early December when millions of beneficiaries still need help but there aren’t enough licensed agents to offer personal care and support.

Second, what if, rather than issuing new rules annually, CMS allowed two or three years for the impact of new rules to be more clearly tested in the market? Current practice may be doing more harm than good. One year’s rules have barely taken effect when new rules for the next year are issued. A two or three-year cycle would also allow CMS to more carefully review comments and implications to all constituencies. 

I invite your thoughts and suggestions. As political leaders, regulators, carriers, and brokers, we want Medicare Advantage to more effectively serve the beneficiaries who place their trust in the program. How do you think we can make it work better?