Rachel Reid, MD, MS, of the Department of Medicine, and fellow researchers have examined the relationship between publicly reported Medicare Advantage plan features (i.e., costs, quality and benefits) and brand market share, and patients’ enrollment decisions. Their findings are published in the Journal of General Internal Medicine.

Medicare Advantage plans provide the option to enroll in a private health insurance plan instead of traditional Medicare. These plans are becoming more popular, now chosen by more than one-quarter of Medicare patients. The Centers for Medicare & Medicaid Services publishes Medicare Advantage plan information on the web, including costs, benefits and 5-star quality ratings, but little is known about how patients use this information to select plans.

“We found that while a variety of factors influence the choices that patients make when enrolling in Medicare Advantage plans, costs contribute more heavily than the 5-star quality ratings,” said Reid. “Brand market share correlates substantially with plan choices, meaning that patients are more likely to enroll in plans offered by a large, recognizable brand name in their area.”

Using Medicare data for a national cohort of 847,069 patients enrolling in Medicare Advantage for the first time in 2011, researchers assessed the associations between the features of the plans patients had to choose from and the enrollment choices that they ultimately made. They found that of the variation in plan choices that they could explain, 13.6 percent was attributable to the plans’ 5-star quality ratings, while plan costs cumulatively explained nearly three-times this much. Within costs, premiums carry more weight in influencing choices than out-of-pocket costs (accounting for 25.7 percent and 11.6 percent of variation, respectively). But, encompassing 35.3 percent of the enrollment variation explained, brand market share is a key factor associated with enrollment decisions.

Researchers also found that nationwide, patients are willing to pay more for a plan with a higher 5-star quality rating, but that willingness to pay more for higher-quality diminishes at the highest rating levels. On average, patients are willing to pay $549 more to switch from a 2.5-star plan to a 3-star plan, but only $68 to switch from a 4.5-start plan to a 5-star plan.

“There is a lot to consider when deciding on a Medicare Advantage plan,” said Reid. “Consumers should carefully weigh the cost and quality of the plan options available in their local markets. Name recognition alone may not always be the best sign of value.”

“The Medicare Advantage quality rating and public reporting approach is not dissimilar to approaches already in use or planned for state exchanges across the country,” she added. “For the Centers for Medicare & Medicaid Services and policymakers for other insurance exchanges, these findings suggest that there may be opportunities to improve communication with consumers about important factors to consider when selecting an insurance plan.”