Char Hu, Ph.D., CEO, The Helper Bees.
Not so long ago, Medicare Advantage represented only a tiny subset of seniors in the United States. Today, more than half of eligible Medicare beneficiaries use it as their medical insurance provider. What sparked the sudden adoption?
The short answer is that members can now enjoy a wide variety of services ranging from food delivery and transportation to lawn care. As a result, Medicare Advantage has birthed an entire ecosystem of services tailored to aging-at-home adults.
But as the CEO of an insurtech company that partners with Medicare Advantage and long-term care insurance providers to support service offerings like these, I’ve found that the same services that now make Medicare Advantage so popular also create challenges for insurers to maintain. As insurers add more services, they exponentially complicate the administration side of delivering them. Will the program be able to scale to meet the needs of nearly 20% of the U.S. population?
Let’s investigate the program and how insurers can meet those needs more effectively.
The Quiet (And Growing) Impact Of Medicare Advantage
The program now known as Medicare Advantage was first launched in the ’70s but didn’t gain mass adoption until the 2000s. The Medicare Advantage we know today was officially launched in 2003 with the passage of Part D. Today, it’s being adopted by a higher percentage of people than ever before.
One of the most notable adoption leaps started in 2019, thanks to changes that were enacted into law that same year. Only 37% of seniors used Medicare Advantage in 2018, compared to nearly half in 2022.
The leap took place when Congress greatly expanded the offerings known as “supplemental insurance benefits.”
Previously, Medicare Advantage plans covered three main categories of supplemental insurance benefits: vision, hearing and dental. In 2019, the Centers for Medicare & Medicaid Services (CMS) relaxed the definition of what constitutes “primarily health-related” benefits.
Around the same time, CMS expanded the flexibility again by creating a new category (SSBCI—Special Supplemental Benefits for Chronically Ill). This plan allows insurers to offer more diverse services (such as companionship, grocery services, repairs and pest control) for members who meet the SSBCI standards.
Today, these supplemental benefits have created a wider range of services for adults who want to age in place.
Weighing The Risks Versus The Benefits
The expansion of supplemental benefits can give vulnerable populations the support required to maintain their homes and their health. When you consider that, according to a survey from Silvernest (via MarketWatch), nearly 90% of seniors say they want to remain in their homes as they age, it’s no wonder these plans are more popular than ever.
From the insurer’s side, supplemental benefits have also become a key selling point that differentiates Medicare Advantage from standard Medicare.
The future of Medicare Advantage supplemental benefits may be defined by a single question: How can insurers offer these benefits more affordably?
Right now, there is potential waste in the build-your-own-plan side of benefits. A more member-directed route could allow you to drive down costs because you don’t have to guess which services will be utilized by members. Instead of speaking to a case manager to identify the benefits available to them, for example, the member (or a caregiver) could log in, see a menu of benefits and then select the ones that will be most impactful for them. You could even allow the member to change those benefits from month to month, depending on their care needs. This “member-directed approach” would allow the member to select what they want instead of an insurer attempting to predict what utilization will be like for new offerings.
Beyond that, here are additional cost-saving tactics.
1. Determine how you can use technology to streamline processes and incorporate data and automation to increase efficiencies.
2. Build a pre-vetted network of trusted service providers. This may seem costly at first, but over the long run, it could result in savings.
3. Research the most in-demand services in the areas you serve. Then negotiate with local service providers for referral or bulk discounts.
The key, of course, is to reduce costs without sacrificing quality. These benefits are not merely cost centers. They have a real human impact.
Remembering The Human Impact
I recently spoke to someone who was moved to tears when she realized that she could receive yard maintenance through her Medicare Advantage supplemental benefits.
The woman I spoke to became disabled after an accident involving a drunk driver. Over the years, she remained an optimistic person, but she struggled to stay independent. She started mowing her lawn one day and couldn’t finish the job due to her disability and related health conditions. Two months went by, and her overgrown yard was a constant reminder of the home care she couldn’t complete.
I told her that yard maintenance could be fully covered through her Medicare Advantage supplemental benefits. She was elated.
Highlighting these conversations is important. I think that’s key to remembering the human impact of these benefits. It’s easy to get lost in numbers and medical jargon. But a simple conversation with someone on the receiving end of these benefits keeps their value top of mind. Especially if Medicare reimbursement rates change, it will be more and more important for insurers to share the benefit of these services (internally and with government agencies) so they can continue to offer them. Also, plans can combine member testimonials with standardized data on utilization to further drive home the value of their services.
At the end of the day, convenient services like these can make aging in place possible for more people. These supplemental benefits unquestionably allow more Americans to live at home longer and with more autonomy.
As Baby Boomers require more healthcare services, I expect the conversation around Medicare Advantage plans and their supplemental benefits to continue to be a hot topic.
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