The growth in Medicare per capita spending is slower as a result of fewer hospital readmissions and a shift to generic prescription medications, and Medicare Advantage plans are also beginning to contribute to the moderating trend.
If the sluggish economy was the sole driver of the Medicare slowdown, as some economists have noted, those services that seniors have more discretion over would have also decreased significantly, said Jonathan Blum, acting principal deputy administrator of the Centers for Medicare & Medicaid Services, and director of its Center for Medicare.
"We have a much different Medicare program than we did three or four years ago, before passage of the Affordable Care Act," the CMS official said at a recent conference sponsored by America's Health Insurance Plans (AHIP) in Washington. "Benefits are better, quality is better, and costs are coming down."
Another emerging trend is that more seniors are enrolling in private Medicare Advantage, or Part C, plans and more of them are choosing the better performing plans. "Five percent growth is projected in 2014 in Part C, which is faster than overall growth in the Medicare program," Blum said.
"The most pleasant surprise is that we've seen a steady but dramatic increase in the number of plan beneficiaries who are in 4-Star and 5-Star plans," he said. "In 2014, it is 55 percent."
Medicare uses a number of quality measures to rate Medicare Advantage plans from one to five stars so beneficiaries can compare them, and Blum said the Medicare Advantage program presents an opportunity to drive quality improvement.
Many plans have dedicated themselves to quality improvement, putting in place programs and provider contracts to change from being a 2- or 3-Star plan to 4- or 5-Star plan.
"My father is in a 4-Star plan, and I feel comfortable that my father is receiving the best possible care from his plan," Blum noted.
Beneficiaries also have switched from 2- or 3-Star plans to 4- or 5-Star plans. CMS will help beneficiaries, particularly those in low performing plans, to make the change to those that are high performing plans.
CMS also pays Medicare Advantage plans substantially less than before ACA, "when average plan payments were 114 percent of Medicare fee-for-service overall and now is closer to 103 percent and getting down to the goal of parity," he said. "So we are paying lower payments to our plans compared to the average FFS; quality is increasing; there is no change in benefits, and per capita costs in Part C is essentially flat."
He was concerned, however, that the Star ratings do not necessarily relate to a Medicare Advantage plan's compliance audit score. "Over time we hope to see that their quality score would also reflect their compliance score," Blum said. "All plans no matter how many stars continue to have compliance issues."