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How Medicare Advantage Fuels Innovation in Care of Seriously Ill

Analysis  |  By Christopher Cheney  
   July 23, 2018

The federal program's financial incentives have encouraged the development of care models that help keep frail patients out of emergency rooms and inpatient wards.

Medicare Advantage is a hotbed of innovation in efforts to improve care for seriously ill patients, researchers say.

"The financing structure of Medicare Advantage makes it a fertile testing ground for new payment and care delivery approaches, including value-based payment models," the researchers wrote in their report published this month by the Duke Margolis Center for Health Policy.

The financing of Medicare Advantage health plans includes a pair of incentives that support innovation:

  • Health plans receive per-member per-month payments. If enrollees' cost of care is less than their capitated payments, the health plan keeps the savings.
  • Health plans receive bonus payments for high-quality care as determined by the Centers for Medicare & Medicaid Services' Star Ratings program

To demonstrate Medicare Advantage's capacity to enable innovative care for seriously ill patients, the Margolis Center researchers focused on care models developed by three health services firms that contract with Medicare Advantage health plans.

The researchers found that the companies—Aspire Health, Landmark Health, and Turn-Key Health—have care models for the seriously ill that share four primary commonalities.

1. Eligibility requirements

The firms analyze claims data from Medicare Advantage health plans to ensure that enrollees meet eligibility requirements for their services.

The analysis goes beyond identifying diagnoses and gauging utilization. Predictive analytics are used to target patients who are likely to incur increasing utilization and costs as their illnesses progress.

"Without rising risk of high-cost care encounters, there is little potential savings to be gained from the intervention," the researchers wrote.

2. Health assessments

The companies' care teams conduct and maintain health assessments of patients that help form comprehensive understandings of health status and risk factors such as safety concerns in the homes of patients.

The health assessments generate a wealth of data, the researchers wrote. "The information recorded in these assessments may then be used to inform risk stratification within patient cohorts, to prioritize resource needs for patients, and to tailor care plans."

3. Aggregated data

The assessment data is combined with claims data in computer programs that monitor patient health status and risk level.

Dashboards and reporting from the combined data are used to monitor several measures, including patient engagement, quality of care, utilization, and clinical outcomes. The information helps care teams decide whether interventions can avoid high-cost encounters such as emergency room visits.

4. Home health

Health services are delivered in a patient's home or residence facility.

Access to services from the companies is extensive, the researchers wrote. "All of them provide round-the-clock accessibility to patients, which is critical for quickly addressing patient concerns and needs in order to prevent or divert emergency visits and hospital admissions."

Expanding innovative care models beyond Medicare Advantage

The researchers say Medicare Advantage's innovative care models for the seriously ill face three expansion hurdles: rural economics, workforce training, and inflexibility in traditional Medicare.

The home health approach at Aspire Health, Landmark Health, and Turn-Key Health is costly in rural areas, where the distance between patient homes can be great. Travel costs limit the financial viability of the models.

For these care models, clinical leaders are particularly difficult to find because they must have both clinical and management training. The researchers say management training should be added to medical school curricula and post-doctoral education.

If traditional Medicare embraces these care model, innovation-stifling standardized rules would likely be adopted, the researchers wrote. "Those rules would necessarily limit the flexibility of the models to meet the needs of patients."  

The researchers make three recommendations to promote care models for the seriously ill:

  • Incentivize the care models for traditional fee-for-service Medicare patients such as expanding the Independence at Home demonstration program to support care models with interdisciplinary teams focused on seriously ill patients
  • Study more serious illness care models to generate data on utilization, quality, and cost
  • Support workforce training that better prepares providers for practicing medicine under alternative payment models

Christopher Cheney is the senior clinical care​ editor at HealthLeaders.


Capitation and quality bonus payments foster innovation in Medicare Advantage health plans.

Commonalities in care models for the seriously ill include eligibility requirements, health assessments, harnessing of data, and home health.

Medicare Advantage care models for the seriously ill face expansion barriers to new markets.

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