This study examined the consequences of adding a fitness-membership benefit on the self-reported health status of enrollees in Medicare Advantage plans. Using a quasi-experimental design, we found that persons enrolling in plans after the addition of a fitness-membership benefit reported significantly better general health, fewer limitations in moderate activities, less difficulty walking, and higher PCS scores than did persons who enrolled in the same plan before the fitness benefit was added and in matched control plans that never offered a fitness benefit. These patterns persisted in the analyses of 2-year follow-up responses for all measures except self-reported general health. Our findings suggest that there is an association between the adoption of fitness-membership benefits in Medicare Advantage plans and the enrollment of healthier Medicare beneficiaries.
Our findings are consistent with the results of cross-sectional studies of benefit offerings and risk selection. Atherly et al. reported that prescription-drug benefits and vision benefits were strong predictors of the selective enrollment of less-healthy persons in Medicare+Choice (now Medicare Advantage) plans.27
Likewise, Feldman et al. found that dental benefits were associated with favorable selection in the same population.28
In contrast, hearing benefits were not associated with selective enrollment in Medicare Advantage plans.27
In a study of disenrollment from Medicare managed-care plans, Ng et al. reported that combinations of benefits can balance such selection factors; for instance, plans that offer both prescription-drug coverage and dental benefits may have a more diverse risk pool than plans that offer either of these benefits alone.29
In our study, case plans that added a fitness-membership benefit did not institute other changes to their benefit design. Therefore, it is unlikely that such competing forces influenced our findings.
These studies examined data before the Medicare program instituted an enhanced risk-adjustment payment system in 2004. Risk-adjusted payments are designed to reduce incentives for plans to avoid high-cost patients.2,4
However, the enhanced Medicare risk-adjustment model has the power to explain only 11% of the total variation in health spending. Furthermore, the model over-predicts costs for persons in good health and underpredicts costs for persons in poor health, yielding overpayments for healthy enrollees and underpayments for less-healthy enrollees.25,30
Therefore, the continued limitations of the CMS payment model may not discourage Medicare Advantage plans from engaging in risk-selective activities.6,9
Our 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.
The primary limitation of our study is that Medicare beneficiaries were not randomly assigned to the case and control plans. Before the fitness-membership benefit was added to the case plans, enrollees in the case and control plans reported similar health status, and we used a quasi-experimental approach that can account for time-invariant characteristics of health plans. However, we cannot exclude the possibility that unmeasured differences between the case and control plans influenced our study findings, nor can we definitively infer causality.
Our study cannot establish the rationale underlying the decisions of Medicare Advantage plans to offer coverage for fitness memberships. The plans may have adopted such benefits for reasons that are unrelated to enrollment or retention of less costly patients. For example, offering coverage for fitness memberships may increase total market share, irrespective of the health profile of the plan’s population. Alternatively, plans may have instituted fitness-membership benefits to improve the health status or reduce the health spending of their current beneficiaries. These motives are not mutually exclusive.
We were limited to self-reported measures of health and were unable to examine health service utilization and spending. However, other studies have shown that self-reported health measures are reliable predictors of patients’ future health care use and costs.21,22,24
We did not have information relating to the enrollees’ Hierarchical Condition Category risk scores. The CMS uses these scores to calculate risk-adjusted payments to Medicare Advantage plans. However, we observed a similar prevalence of clinical conditions and a nearly identical mean number of coexisting conditions among enrollees in the case plans and those in the control plans. Our study was also limited to plans participating in the Medicare Advantage program and did not compare selective enrollment between the Medicare Advantage program and the traditional Medicare fee-for-service program.
In conclusion, we found that plans offering coverage for fitness memberships may attract and retain a healthier subset of the Medicare population. Even with important components in place to promote more balanced risk pools — standard benefits packages, risk-adjusted payment, and guaranteed coverage — some Medicare Advantage plans may engage in favorable selection by designing insurance benefits that selectively appeal to healthy persons.