Medicare Advantage Disenrollment in Final Year of Life Continues Troubling Pattern

Late last month, the Government Accountability Office (GAO), a watchdog agency in the legislative branch, released a report showing that people in their last year of life disproportionately disenrolled from Medicare Advantage (MA) into Original Medicare. For some MA plans, these enrollees switched to Original Medicare at a rate nearly 10 times higher than other enrollees. As GAO notes, these shifts may point to problems in access to or quality of care that arise as needs increase.

MA plans are offered by private insurance companies that receive a fixed amount of money from Medicare each month, called capitation, for each enrollee. In theory, capitation has the potential to reduce costs by creating incentives for plans to curtail unnecessary spending. But such an incentive has risks as well. Insurers may benefit by denying needed care, finding ways to drive up their capitation rates that do not reflect reality, or structuring their coverage in such a way that it appeals to people who need less care and dissuades those who need more—such as offering gym memberships to attract healthier enrollees.

Beneficiaries in the last year of life tend to be in poorer health and have higher health care costs. GAO notes that “Beneficiaries in the last year of life are generally high-cost and disproportionately require specialized care, with a few studies estimating that they may account for as much as a fifth to a quarter of all [Original Medicare] spending.”

Similarly, a previous GAO report showed that some MA plans had very high disenrollment rates among beneficiaries who were in poorer than average health. Beneficiaries who disenrolled cited barriers to getting needed care and problems accessing their preferred providers as reasons for switching coverage. This report spurred the Centers for Medicare & Medicaid Services (CMS), the agency that oversees the Medicare program, to begin tracking MA disenrollments by health status.

But CMS does not specifically track disenrollments by year of life, which this latest GAO research found to be disproportionately high. GAO interviewed many stakeholders, including Medicare Rights, who pointed to several potential causes for such shifts, specifically that MA provider networks may limit access to specialized care, MA plans may contract with lower quality nursing homes or home health agencies, and prior authorization alone or coupled with inappropriate denials may cause significant administrative burdens when the need is acute.

This disenrollment pattern is important for several reasons. The affected beneficiaries may face increased out-of-pocket costs because they may not be able to enroll in supplemental coverage, such as a Medigap or Medicaid, when they transition to Original Medicare. They may have suffered without appropriate care while in MA, or they or their caregivers may have been significantly burdened as they attempted to find care. In addition, it may reveal that MA plans are inappropriately benefiting by cherrypicking healthier enrollees and squeezing out enrollees when they become less profitable.

This analysis comes on the heels of other reports showing MA enrollees are more likely to face issues affording their care than are people with Original Medicare and supplemental coverage.  

We support Medicare beneficiaries having meaningful choices in how they access coverage, and it is clear that strong MA oversight is long overdue. We urge policymakers to correct this and to prioritize beneficiary health, safety, and well-being over the profits of private insurers.

Read the GAO report.

Read more about MA enrolling healthier beneficiaries.

Read more about MA overpayments.