MAOs are allowed  flexibility in designing their plan benefit packages and cost sharing for  certain services can vary widely by MA plan. The Good Health Group of Plans Generally Charged Lower Premiums and Higher Cost Sharing for Certain Benefits, and Offered Fewer Additional Benefits

The good health group of plans—MA plans in which the average  beneficiary had projected health care costs at least 10 percent below those  for an average Medicare beneficiary within the plan’s service area— generally charged lower premiums and had higher cost sharing for certain  services compared with the poor health group of plans. 1.) For example, in 2008,    almost half of the good health group of plans—46 percent—did not have a  premium for Part C (medical) or Part D (prescription drug) coverage,  while about one-fifth of the poor health group of plans had no premium. The Good Health Group of Plans Generally Had Higher Cost Sharing for Certain Services

The good health group of plans tended to have higher cost sharing for the  services we reviewed—which included inpatient hospital acute stays,  inpatient mental health stays, skilled nursing facility (SNF) stays, and renal  dialysis—than the poor health group of plans. The Good Health Group of Plans Generally Had Fewer Additional Benefits

Plans in the good health group were less likely to include certain  additional benefits in their benefit packages, such as vision and dental  care coverage, but were more likely to include a fitness benefit than plans  in the poor health group. 3.) twenty-three percent of plans in the good health group included coverage  for comprehensive dental benefits compared with 33 percent of plans in  the poor health group. More MA Plans and Beneficiaries Were in the Good Health Group than in the Poor Health Group of Plans

In 2008, the plans in the good health group differed with those in the poor  health group by plan type, plan size, and, for HMOs, by the difference  between MA payment benchmarks and estimated FFS spending. Our analysis of the percentage of beneficiaries, including those enrolled in  SNPs, by health group showed that 29 percent were in the good health  group of plans, 55 percent in the average health group of plans, and   16 percent in the poor health group of plans. 5.) The five MAOs varied in the extent to  which their plans fell into the good, average, and poor beneficiary health  status groups. For example, one MAO had 17 percent of its  beneficiaries in plans in the good health group and 17 percent in plans in  the poor health group, while another had 49 percent of its beneficiaries in  plans in the good health group and less than 1 percent in plans in the poor  health group. 7.) Excluding SNPs, MA plans with lower enrollment were more likely to be in  the good health group than plans with higher enrollment. CMS Recently Revised Its Process for Ensuring That MA Plan Benefit Packages Do Not Discriminate against Beneficiaries in Poor Health

For contract year 2010, CMS modified the process it used to ensure MA  plan benefit packages do not discriminate against beneficiaries in poor  health. CMS Revised the Way It Identifies Benefit Packages Likely to be Discriminatory, and Some New Review Thresholds Allowed Higher Cost Sharing

For contract year 2010, CMS modified the benefit package review process  used in previous years. Under the new process for reviewing MA plans for the  likelihood of discrimination, CMS examined plans’ 2010 OOP maximums  and identified MA plans with comparatively high cost-sharing amounts. For example, among plans without an  OOP maximum or one above the amount specified in the 2010 Call Letter,  the copayment allowed for a typical inpatient mental health stay doubled  from $61 to $130 per day and the copayment allowed for a typical SNF stay  increased from $53 to $70 per day. In addition, all plans contacted  subsequently reduced cost-sharing amounts to at or below agency  thresholds. Our analysis indicated that the  percentage of plans initially exceeding and remaining above one or more  cost-sharing thresholds in those 2 years varied by plans’ average  beneficiary health status, as follows:    Among the good health group of plans reviewed for contract year 2008,   39 percent were initially identified as having cost sharing that exceeded  CMS’s cost-sharing thresholds and 33 percent were approved with cost  sharing that exceeded CMS’s cost-sharing thresholds, a decrease of   6 percentage points. CMS Comments

CMS stated that the agency’s general experience with beneficiaries—that  beneficiaries select MA plans based on their individual health status—is  consistent with the report’s findings. 2.
Why GAO Did This Study

Nearly 11 million Medicare beneficiaries are enrolled in Medicare Advantage (MA), Medicare's private health insurance option. Benefits vary by MA plan and may include coverage for services not available in traditional Medicare. To ensure MA plan benefit package designs do not discriminate against beneficiaries in poor health with high expected health care costs, the Centers for Medicare & Medicaid Services (CMS) reviews and approves all benefit packages yearly. GAO examined (1) MA plan benefit packages by average health status of plans' enrolled beneficiaries, (2) distribution and characteristics of MA plans by average beneficiary health status, and (3) CMS's process for ensuring that benefit packages do not discriminate with respect to health status. Using 2008 data on beneficiaries' expected health care costs, the most recent data available, GAO sorted 2,899 plans enrolling 7.5 million beneficiaries into three groups: good health (below-average expected costs), average health, and poor health (above-average expected costs). GAO then analyzed MA plan benefit packages by health group and reviewed CMS documentation and interviewed agency officials on CMS's benefit package review process. GAO did not determine whether plans structured benefit packages in response to enrolled beneficiaries' health status or beneficiaries in particular health groups chose plans because of the benefits.

What GAO Found

In 2008, plans in the good health group generally had lower premiums, higher cost sharing for certain services, and fewer additional benefits than plans in the poor health group. Almost half of the plans in the good health group did not have an MA premium for medical or drug coverage, while about one-fifth of plans in the poor health group had no MA premium. Plans in the good health group had higher cost sharing, weighted by enrollment, for inpatient hospital care, skilled nursing facility stays, and renal dialysis than plans in the poor health group. Plans in the good health group were more likely to have an out-of-pocket (OOP) maximum, but the average OOP maximum for plans in that group, weighted by enrollment, was 55 percent higher than that for plans in the poor health group. Comprehensive dental and hearing aid benefits were more likely to be included in the benefit packages for beneficiaries in the poor health group of plans whereas fitness benefits were more likely to be included in the benefit packages for beneficiaries in the good health group of plans. Forty-three percent of plans were in the good health group, 37 percent in the average health group, and 20 percent in the poor health group. Twenty-nine percent of MA beneficiaries were in plans in the good health group, 55 percent in plans in the average health group, and 16 percent in plans in the poor health group. Among the five largest companies sponsoring MA plans, beneficiary health varied: one sponsor had 17 percent of its beneficiaries in plans in the good health group and 17 percent in plans in the poor health group; another sponsor had 49 percent of beneficiaries in plans in the good health group and less than 1 percent in plans in the poor health group. Average beneficiary health status also varied by other factors, such as plan type and plan size. CMS has revised its process for reviewing MA plans for the likelihood of discrimination. It developed a new methodology for setting cost-sharing thresholds--criteria used to identify benefit packages likely to discriminate against certain beneficiaries. For contract year 2010, CMS contacted all MA plans with benefit packages identified as likely to discriminate, and all plans subsequently met cost-sharing thresholds. The new methodology for setting cost-sharing thresholds allowed higher cost sharing for some services relative to 2009. For example, among plans without an OOP maximum or one above $3,400 for 2010, allowed cost sharing for a typical inpatient mental health stay doubled, from $61 per day to $130 per day, and allowed cost sharing for a typical skilled nursing facility stay increased from $53 to $70 per day, compared to 2009. In comments on a draft of this report, CMS noted that GAO's findings are consistent with the agency's experience. CMS also stated that, prior to contract year 2010, it targeted for cost-sharing reductions plans with the most egregious cost sharing and often reduced cost-sharing amounts, but to amounts that were still above the thresholds.