Medicare Compliance & Reimbursement

Survey reveals seniors reticent to switch providers, even to save money.

A new survey by the Center for Studying Health System Change shows that seniors are quite unwilling to sacrifice their choice of providers in return for saving on costs. The study comes on the heels of a March HSC study showing that working-age Americans are becoming much more willing to accept restricted choices if it saves them money.  Seniors are a different case, apparently.

According to data collected in 2003, only 45 percent of seniors 65 and older were willing to trade provider choice to save money, HSC found. That's compared to 70 percent of people age 18 to 34.

The study shows that Medicare Advantage plans will have a much harder time substantially growing their enrollment base than they might have thought, HSC researcher and study author Ha Tu tells MLR. The types of seniors that MA plans need to win over - those with FFS or supplemental plans - are especially unwilling to accept the narrower provider networks that MA plans will be offering, she says.

Surprisingly, the survey showed that seniors who are most unwilling to accept decreased provider choice in return for cheaper rates are those with supplemental coverage: almost two-thirds of seniors with MediGap or retiree coverage are unwilling, and about four in ten were strongly unwilling.

That could be a shock for the many health plans that have assumed that MediGap purchasers would be particularly likely to switch over to MA plans.

Can PPOs Compete With 'Unfettered Choice?' Proponents of Medicare Advantage have argued that Medicare PPOs will win support from seniors for the same reasons that PPOs are outpacing HMOs in the commercial market. But that's a flawed argument, Tu suggests. In the commercial market, PPOs are attractive because they offer more choice than HMOs, their chief competitors. But in the Medicare market, the new PPOs will be competing with traditional Medicare fee-for-service, which offers "unfettered choice" to beneficiaries, Tu says.

MA plans could find it difficult to compete with FFS' unlimited choice of providers, Tu warns.

"Given widespread beneficiary concerns about restricted provider choice, it appears that Medicare Advantage plans will need to offer broad provider networks, along with richer benefit packages or lower out-of-pocket costs, to attract enough seniors from traditional Medicare to boost enrollment significantly," the report says.

But the news isn't so bad for MA, says Mohit Ghose of America's Health Insurance Plans. Even if "only" 45 percent of seniors said they are willing to sacrifice some choice for saving costs, that's in contrast to the fact that currently a mere 11 percent of seniors are in MA. That supposedly small 45 percent actually represents a strong growth potential over existing MA enrollment, Ghose points out.