What is the obligation of a Medicare Advantage plan? Shareholder value, or patient health?

By Brian Murphy

What is the obligation of Medicare Advantage (MA) plans?

Maximizing shareholder value? Or, keeping members healthy?

It’s both … but ultimately the latter, I believe. YMMV.

Recently I stated that UnitedHealth and other MA organizations bear responsibility in keeping their members healthy. A healthcare executive disagreed:

“Is State Farm responsible for keeping your car up and running? Washing it, providing maintenance and repairs, etc? Why on earth would anyone think an insurance company’s role has anything to do with health. That’s you, your physicians (mechanics), etc. roles.

Insurance companies are financial intermediaries between you and your providers, just like State Farm is to your car and your mechanic. Just because insurance companies like to call themselves healthcare companies, doesn’t shift the management of someone’s health to them.”

I don’t think this executive is correct, even though there is truth in what he says.

Day-to-day health maintenance should reside with the individual. Most of us know we need to eat well, exercise, curb alcohol use, etc.–and I would not trust another entity to do that. If I need skilled opinion, surgery, or other intervention, then I’m turning to a provider.

But MA plans have a clear obligation to improve member health. Per CMS the purpose of the MA program is to maintain high-quality care and improve health outcomes. MA is an alternative to traditional Medicare, allowing private insurance companies to offer Medicare-approved health plans. CMS started the program to encourage innovation – including a focus on preventive health programs to improve health outcomes and foster new methods of care delivery.

MA plans MUST cover all medically necessary services that original Medicare covers. They can offer more benefits, but not less. And CMS holds them accountable through quality measures, financial incentives, and regulatory oversight.

If we take insurance companies at their word—admittedly a dicey proposition—they themselves place member health at the very top of their values. UnitedHealthcare’s stated mission reads:

“At UnitedHealthcare, our mission is to help people live healthier lives and make the health system work better for everyone. We dedicate ourselves to this every day for our members by being there for what matters in moments big and small — from their earliest days, to their working years and through retirement.”

Notice this doesn’t say maximizing shareholder value.

Of course, insurance companies are businesses, and the majority are for-profit entities. If they pay out more in claims then they take in premiums, they will go out of business. Which means they must rigorously audit, scrutinize, at times deny claims.

But let’s not let them dodge their ultimate responsibility. They’re not a car insurance company. And it is in their interest to keep their members healthy—which in turn helps their bottom-line, by lowering their medical loss ratio.

In short, member health is good business.

I welcome your thoughts on this issue. Email me at brian.murphy@norwood.com.