Data show clear economic divide between MA and FFS Medicare enrollees

By Frank Diamond / July 10, 2023

Medicare Advantage payers need to start paying attention to the health and economic status of potential new members when they turn 64.

Waiting until they’re 65 means missing out on the data that really matter, according to a white paper by Harvard Medical School and Inovalon, a Maryland-based healthcare analytics company.

MA enrollees have less money and face greater challenges in overcoming the social determinants of health (SDOH) than enrollees in fee-for-service (FFS) Medicare, Boris Vabson, Ph.D., one of the white paper’s co-authors, told Fierce Healthcare.

“Medicare Advantage is an upscale version of Medicaid in the sense that it provides more benefits,” said Vabson, a researcher and health economist at Harvard Medical School. “It provides lower cost sharing. There are some restrictions in Medicare Advantage that aren’t in fee-for-service Medicare. But for someone who may be economically disadvantaged, it’s a really great deal to enroll in Medicare Advantage.”

Research on the Medicare population usually focuses on those who’ve already made their choice or who’ve switched from one form of Medicare coverage to another (who the authors dub “switichers”). Researchers wanted to find differences in the health status, socioeconomic characteristics and demographics that might determine what type of Medicare plan somebody chooses. The researchers compared health status by examining data for individuals starting when they turn 64.

“Perhaps the starkest difference between the two groups is in the types of commercial plans in which they were enrolled, pre-65: MA enrollees are over 50% more likely than those in FFS to have been enrolled in an HMO plan (recall that 100% of both groups were in commercial coverage, pre-65),” the white paper states. “Given that MA plans tend to have relatively more restrictive care management policies, it makes sense that individuals who have previous exposure to care management would be more comfortable with that type of coverage under MA.”

The average income of an FFS enrollee is $85,085; for an MA enrollee, it’s $76,720. Location plays a part: 35.5% of FFS enrollees live in a ZIP code in which people have incomes above $100,000 a year, while only 23.8% of MA enrollees live in those areas.

“The average MA enrollee has a net worth that is only 74.2% of the average FFS enrollee,” according to the white paper.

The data come from three sources: Inovalon’s data set, which encompasses about 30% (or about 80 million) individuals enrolled in commercial health plans, and a database maintained by the Centers for Medicare & Medicaid Services that contains medical and pharmacy claims for all FFS Medicare beneficiaries, as well as FFS and MA enrollment data. The information also comes from SDOH data kept by aggregating company Acxiom about individuals in different neighborhoods. The data were deidentified using the HIPAA Safe Harbor method.

Vabson said the availability of those data and the ability to connect different data siloes allowed him and his co-authors to drill down to what influences an individual’s choice of Medicare coverage.

“Medicare Advantage health plans should tailor their marketing toward the types of people who we’ve identified as being likeliest to enroll,” said Vabson. “At the same time, they can tailor their product to new types of members who historically haven’t been as likely to enroll in Medicare Advantage. So, specifically, maybe higher income individuals or individuals living in relatively more rural areas. Individuals who are enrolled in PPOs, or other kinds of non-HMO health plans.”

MA enrollees are more likely to live in areas in which more individuals have only a high school education or less. In addition, MA enrollees are less likely to own a home or car and more likely not to speak English. There’s also more unemployment, though the difference isn’t statistically significant.

“MA and FFS enrollees have similar prevalence of the top chronic conditions among Medicare beneficiaries including hypertension and hyperlipidemia,” according to the white paper. “FFS enrollees are more likely to have certain conditions, including cancer, joint issues (rheumatoid arthritis, osteoarthritis, and osteoporosis), and heart issues (ischemic heart disease and prior experience with heart failure). On the other hand, MA enrollees are more likely to have diabetes.”

The white paper also looks at how SDOH influences utilization and why understanding how they do so can help both MA and FFS Medicare deliver better care to beneficiaries in both systems.

“Unlike post-Medicare characteristics, pre-Medicare characteristics are not confounded by the Medicare program type in which individuals enrolled (differential selection) or by coding intensity or care differences after enrollment,” the white paper states. “We also applied a difference-in-differences research design, tracking individuals pre- and post-Medicare enrollment at 65.”