Gym Offers May Give Medicare Advantage Plans an Advantage

By Emily P. Walker, Washington Correspondent, MedPage Today
Published: January 12, 2012


Insurance plans that include gym memberships as part of the package -- as some Medicare Advantage plans do -- attract healthier people, which may be a form of covert cherry-picking, researchers charged.

In an analysis of Medicare Advantage plans that began offering gym memberships in 2004 or 2005, the proportion of new enrollees who reported having excellent or very good health was 6.1 percentage points higher than before the fitness plan was offered (35.3% vs. 29.1%), according to a study published in the Jan. 12 issue of the New England Journal of Medicine.

Those who joined a plan after it added a gym benefit were also less likely to report a limitation on daily physical activities and limitations on walking than the early enrollees, according to Alicia Cooper, MPH, of Brown University, and Amal Trivedi, MD, MPH, of the Providence (R.I.) Veteran's Affairs Medical Center.

Packages with gym memberships are increasingly common among Medicare Advantage plans. In a subset of 102 such plans, 14 offered a gym membership in 2002; by 2008, 58 of them did, suggesting that doing so is "an attractive business strategy," for insurers, Trivedi told MedPage Today.

Prior studies have shown that elderly people who are enrolled in a fitness program are healthier and cost less to insure than those who aren't in fitness programs.

For their analysis, Cooper and Trivedi identified 11 Medicare Advantage
Plans that offered new fitness club memberships in 2004 or 2005 and matched those to 11 control Medicare Advantage plans that didn't offer fitness memberships. They also compared the health status of 755 people who picked a Medicare Advantage plan after it had added a fitness benefit ("new enrollees") to more than 4,000 people who were already enrolled in a plan at the time it added a fitness benefit ("early enrollees").

Compared with the group that didn't have any fitness benefits in their Medicare Advantage plan, people enrolled in the fitness-benefit plans ranked their general health 4.7 percentage points higher; scored 9.2 percentage points lower for having a limitation on physical activity; and scored 7.4 percentage points lower for having a difficulty walking.

"Medicare Advantage plans offering coverage for fitness memberships may attract and retain a healthier subgroup of the Medicare population," the study authors concluded.

So, what's the problem with insurers attracting healthier people?

"The main problem is that policy makers envisioned insurers in the Medicare Advantage program to compete with their ability to improve quality and costs, and not their ability to attract the healthiest enrollees," Trivedi told MedPage Today.

The study didn't assess the motivation behind insurers offering gym memberships and Trivedi acknowledged that they may well be offering the fitness benefits to improve the health or reduce spending on current beneficiaries.

However, the study's findings "are consistent with the notion that Medicare managed-care plans have continued to selectively market their benefits to healthier beneficiaries, even after the improved risk-adjustment program was instituted," Trivedi and Cooper wrote, referring to a risk-adjusted payment system that Medicare now uses.

The newer model, implemented in 2004, is designed to reduce incentives for plans to avoid high-cost patients. But Trivedi and Cooper said the model over-predicts costs for healthy people and under-predicts costs for unhealthy people so there is still an incentive for insurers to target healthier enrollees.

Medicare Advantage plans are explicitly prohibited from cherry-picking healthy patients. However, "favorable selection" likely does happen in Medicare Advantage plans when insurers create plans with specific benefits -- such as a gym membership, coverage of sports medicine, or dental coverage -- in order to attract more health-conscious people, Trivedi and Cooper argue.

How insurance companies market those health-conscious plans also can lead to favorable selection, they wrote. For instance, when an insurer advertises such plans at community-based events, they are targeting mobile seniors and thereby avoiding people who are home-bound, and may be less healthy.

It works the other way, too: an earlier study found that when Medicare Advantage plans offer prescription drug benefits and vision benefits, they attract less healthy people.

Trivedi said the findings of their study should at least raise awareness that favorable selection may be happening and that "there are unintended consequence of creating benefit that appeal to healthy people."

This article was funded by the National Institute on Aging.

Cooper reported having not relevant financial conflicts of interest.

Trivedi reported receiving money from the RAND Cooperation for serving on a expert panel on outcome measure for quality assessment of Medicare Advantage plans.


Primary source: New England Journal of Medicine
Source reference:
Cooper AL, Trivedi AN. "Fitness memberships and favorable selection in medicare advantage plans" N Engl J Med 2012; 366: 150-157.