Filling The Gaps: The Role And Value Of Supplemental Benefits In Medicare Advantage

Filling The Gaps: The Role And Value Of Supplemental Benefits In Medicare Advantage

The Medicare Advantage program launched in 1985 as a means to expand access to coordinated care and comprehensive benefits, and to bring efficiencies and cost savings to Medicare by leveraging private-sector managed care. While important debate continues on the value of managed care generally, beneficiaries are overwhelmingly satisfied with Medicare Advantage, enrollment in the program is increasing year over year, and participating managed care plans are offering a rapidly growing array of new and innovative benefits. These innovative benefits are a key feature of the Medicare Advantage program that differentiates it from traditional Medicare and a key reason for the program’s popularity among Medicare beneficiaries. As policy makers debate the future role of private Medicare plans, they need to take into consideration the preferences of Medicare beneficiaries and build on current innovations, such as supplemental benefits.

Since the creation of Medicare Advantage, the Centers for Medicare and Medicaid Services (CMS) has required private participating plans to invest savings from efficiencies into benefits that “supplement” Medicare or reduce beneficiary costs. In the early years of the program, these benefits typically took the form of reduced cost sharing for beneficiaries along with coverage of prescription drugs (before the creation of the Part D benefit), dental, and vision. For most of the program’s history, CMS has circumscribed supplemental benefit offerings by requiring that they be primarily related to the member’s health needs.

Non-Medical Supplemental Benefits

More recently, however, Medicare Advantage supplemental benefits have evolved considerably. While plans are still likely to reduce cost sharing for beneficiaries and cover dental and vision, they now have more options to offer innovative, non-medical benefits. Through the Bipartisan Budget Act of 2018, Congress began allowing Medicare Advantage plans to offer “special” supplemental benefits for the chronically ill that are not primarily health related (with certain guardrails), opening the door for benefits that are social service in nature, such as food, non-medical transportation , pest control, companion care, and rent subsidies. Later that same year, CMS expanded the definition of “primarily health related” supplemental benefits, opening the door even more and allowing non-medical benefits that help prevent or address cognitive and functional decline, such as respite care and in-home supports. Together, these policy actions marked a significant turning point in Medicare history and at no additional cost to taxpayers—arguably the most significant policy turning point since the creation of the Part D drug benefit, and maybe the most significant since the creation of Medicare Advantage.

Medicare plans are leaning into this policy opportunity. The number of plans offering non-medical benefits has tripled over the past three years, from 626 to 1,851. Currently, 34 percent of Medicare plans offer at least one non-medical benefit (exhibit 1). Medicare Advantage Special Needs Plans (SNPs) are especially likely to offer these benefits. In 2022, 42 percent of SNPs offered Special Supplemental Benefits for the Chronically Ill. This is still short of the 99.9 percent of Medicare plans offering any type of supplemental benefit, but the year-over-year growth is notable. These non-medical benefits range from meals and transportation to social isolation solutions and home modifications.

Exhibit 1: Growth in non-medical supplemental benefits, 2020–22

Source: ATI Advisory analysisreproduced with permission.

The recent Medicare policy shifts toward non-medical benefits have drawn enthusiastic attention from consumer advocates, policy makers, and researchers. While the concept of “non-medical” has been a part of the Medicaid program for decades, Medicare has historically been limited by requirements around “medically skilled care” and an “improvement or maintenance standard”—neither of which are in the spirit of addressing the whole person, which includes upstream non-medical needs.

The growth in supplemental benefits offerings—including those meeting social needs such as meals, nutrition, transportation, and in-home support services—demonstrate Medicare Advantage plans’ interest in addressing social determinants of health and improving the whole-person health of their beneficiaries. The flexibility provided has allowed Medicare Advantage plans to innovate and test new benefit offerings that have the potential to improve the quality of care and outcomes for vulnerable and at-risk beneficiaries.

In addition to the dramatic year-over-year increase in the offering of non-medical supplemental benefits shown above (see also Milliman report), early findings on the benefits are promising, with effects such as reduced loneliness, improved physical and mental health days, and improved medication management. In light of these early findings and rapid growth in offerings, policy makers and stakeholders understandably want to know more about how beneficiaries are using supplemental benefits and the resulting impact on improving health outcomes.


Challenges To Benefit Evaluation

However, there are a number of unique challenges that come with evaluating the impact of non-medical supplemental benefits. First, research suggests that the full impact of social service and other non-medical benefits may take years to develop. While there may be an immediate effect of improved mental well-being or reduced hunger and a more nutritious diet, the metrics policy makers often look to as evidence of positive outcomes and the outcomes our systems are able to readily measure, such as reduced Medicare spending , take time. By the time those savings accrued, the beneficiary may have changed health plans, further hindering accurate evaluation.

Second, there are other factors to account for, such as the availability of family caregivers, Older American Act (OAA) programs, and other community programs that are filling the gaps in our health care system. For example, the OAA nutrition program supplies 900,000 meals to older adults every day (more than 300 million per year), separate from those under Medicare Advantage.

Additionally, researchers struggle to isolate the impact of specific benefits to compare outcomes between beneficiaries who receive them and those who do not. Within a Medicare Advantage plan, individuals with similar levels of need are likely to qualify for similar benefits, and across different Medicare Advantage plans, there are different clinical models, provider networks, and other myriad factors influencing health—meaning there is no “control” group.

As a result, it is difficult to evaluate the direct impact of non-medical supplemental benefits on Medicare beneficiary outcomes, especially if using traditional outcomes such as medical spending and hospitalizations. The immediate effects are often more subtle. As one Medicare Advantage plan representative we interviewed described as an example, “[The member] was temporarily bedbound and her daughter caring for her was completely overwhelmed. Her daughter was so grateful to learn about the respite [supplemental] benefit—it helped tide the member over until she was able to get back on her feet.”

The Way Forward

Does this mean we shouldn’t evaluate supplemental benefits? No. These benefits are clearly a critical part of the value proposition of Medicare Advantage. However, recognizing the challenges that come with measuring value, it will be critical to assemble the right building blocks:

  • Start small. There is a lot to do before we evaluate outcomes, which will require considerable data collection to take place. Beginning in 2023, Medicare Advantage plans must report expenditure data to CMS on a variety of supplemental benefits as part of Medical Loss Ratio reporting. CMS could start by using these data to understand general use and access trends. As an incremental next step, CMS could also add supplemental benefits into encounter reporting, recognizing that it will take time for certain types of non-medical providers to develop core data reporting capabilities needed for encountering.
  • Agree on the outcomes of interest. Often, policy makers and other stakeholders focus on reduced medical use and spending as primary outcomes of interest. These outcomes make sense in a controlled environment or when comparing whole programs to other whole programs. However, it’s unlikely one would confidently know whether specific supplemental benefits alone impact Medicare Advantage members’ hospitalizations, emergency department use, or overall Medicare spending. What can be seen, though, is the impact of these benefits on immediate well-being and satisfaction through member surveys. CMS could (and should) look at the demographics of individuals enrolled in plans offering certain supplemental benefits, to begin to gauge equitable access in offerings.
  • Consider a Center for Medicare and Medicaid Innovation (Innovation Center) demonstration. If CMS and Congress are interested in understanding the effects of specific supplemental benefits, there is currently a mechanism to test this: an Innovation Center demonstration. CMS could design a rigorous study around specific benefits in the fee-for-service or Medicare Advantage programs. This would allow for testing in a controlled manner that minimizes negative outcomes for beneficiaries (for example, if reporting is so burdensome it causes a decrease in benefits). CMS could also build on the Value-Based Insurance Design (VBID) demonstration and data collected through it. The VBID demonstration allows Medicare plans to target benefit design to enrollees based on chronic conditions or socioeconomic characteristics and incentivize the use of benefits through rewards and incentives. As part of this demonstration, CMS is collecting data on benefits.
  • Address workforce limitations. The success of supplemental benefits hinges on provider capacity and capability to deliver services to a Medicare population. For non-medical supplemental benefits, the providers needed are often direct care workers and other professionals that are in short supply. Fulfilling the promise of supplemental benefits ultimately depends on much larger problems in our health and long-term care service economy. CMS and Congress can start to address workforce capacity through technical assistance, career development programs, and caregiver supports.

Understandably, stakeholders are eager to know the impact of supplemental benefits on Medicare beneficiary well-being and whether non-medical interventions live up to the promise of preventing unnecessary hospitalizations and emergency department visits. Innovations can make a meaningful difference to Medicare beneficiaries by filling the gaps in their other coverage sources and reducing their out-of-pocket costs via cost share buy-downs.

Before we push too far on evaluations and data reporting, we need to build the evaluation infrastructure, which requires funding, incentives, learning collaboratives, and thoughtful reporting requirements and data standards. Rushed program and policy changes could reduce or undermine benefits by creating administrative burdens that plans and providers aren’t able to accommodate, or by wrongfully drawing conclusions on incomplete data. Supplemental benefits are meaningful to Medicare beneficiaries and fill gaps that exist in the traditional Medicare program, and our approaches to understanding the value of supplemental benefits should be anchored in that recognition.

Authors’ Note

Authors are employees of ATI Advisory, which provides consultancy services. This project was funded by Better Medicare Alliance.


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