The Medicare Advantage (MA) program is one of the largest healthcare payers in the United States, comprising 34 percent of all people with Medicare in 2018 and witnessing rapid growth relative to traditional fee-for-service (FFS) Medicare. As policymakers look to encourage value-driven, high-quality, and cost-effective care delivery models, there is growing interest in directly comparing traditional FFS Medicare and MA. However, despite the increasing role of MA, there have until now been few full-scale studies that offer insights into the composition, utilization, quality, and cost of care of the MA population relative to FFS Medicare.
The clinical characteristics and care needs of older adults are changing
More than half of the Medicare population have four or more chronic conditions. Effectively managing the delivery of care for Medicare beneficiaries with multiple chronic conditions has the potential to improve the quality of life for these beneficiaries while reducing Medicare spending.
To date, there is little comprehensive information on the performance and value of MA compared to FFS Medicare, due in part to a lack of access to MA data comparable to that available for FFS Medicare. Across the available measures of quality and access, results comparing FFS Medicare to MA are mixed and have changed over time.
To gain a better understanding of differences in demographic and clinical characteristics, overall healthcare utilization, cost of care, and related clinical quality outcomes of MA and FFS Medicare beneficiaries, Avalere assessed two large national samples enrolled for the full year of 2015, selecting beneficiaries with one or more of 3 of the top-5 most prevalent chronic conditions in the Medicare population: hypertension, hyperlipidemia, and diabetes. The following present some of the key study findings.
Finding: MA beneficiaries have more clinical and social risk factors
Health care spending is highly concentrated among individuals with various clinical and social risk factors, including disabilities, functional and/or cognitive impairment, severe or multiple chronic conditions, old age, and dual eligibility for Medicare and Medicaid.
According to the study, MA had a higher percentage of beneficiaries with chronic conditions who enrolled in Medicare due to disability and are dual eligible/low-income beneficiaries than FFS Medicare. Likewise, MA had a higher proportion of racial/ethnic minorities, who tend to have more clinical and social risk factors.
Finding: MA beneficiaries have lower utilization, better outcomes for those with chronic disease
Despite having a higher percentage of beneficiaries with clinical and social risk factors, the MA study population had lower utilization of costly healthcare services, including 23 percent fewer inpatient stays and 33 percent fewer emergency room visits. Although the average annual MA beneficiary costs were not significantly different from average costs for FFS Medicare beneficiaries the patterns of treatment underlying the costs differed; annual spending per beneficiary on preventive services and tests was 21 percent higher in MA whereas FFS Medicare had 17 percent higher spending on inpatient costs and 5 percent higher spending on outpatient/emergent care services.
MA outperformed FFS Medicare on several key quality measures, including a nearly 29 percent lower rate of all potentially avoidable hospitalizations, 41 percent fewer avoidable acute hospitalizations, 18 percent fewer avoidable chronic hospitalizations, and higher rates of preventive screenings/tests, including LDL testing and breast cancer screenings.
Finding: Outcomes and cost savings are better for MA beneficiaries with diabetes
Avalere examined the most clinically complex cohort, those with diabetes and the other two diseases, in each sample. MA achieved 6 percent lower average per beneficiary costs than FFS Medicare for all patients in the clinically complex diabetes cohort. MA achieved 21 percent lower average per beneficiary costs than FFS Medicare for dual eligible patients in the clinically complex diabetes cohort. Relative to FFS Medicare, MA beneficiaries in the clinically complex diabetes cohort experienced a 52 percent lower rate of any complication and a 73 percent lower rate of serious complications of the lower extremity. Similarly, MA achieved a 71 percent lower rate of serious complications of the lower extremity than FFS Medicare for dual eligible patients with diabetes.
Finding: Dual eligible/low-income subsidy MA beneficiaries experience better patient outcomes and lower costs
MA achieved 17 percent lower annual costs per dual eligible beneficiary than FFS Medicare. MA dual eligible beneficiaries, meanwhile, experienced 33 percent fewer total hospitalizations and 42 percent fewer emergency room visits. MA also achieved better patient outcomes among dual eligible beneficiaries, including 49 percent fewer potentially avoidable hospitalizations for acute conditions based on the quality measure, and MA dual eligible beneficiaries had a higher frequency of testing and preventive services than those in FFS Medicare, including a 46 percent higher rate of breast cancer screening.
These findings provide new evidence regarding the value of MA relative to FFS Medicare and demonstrate that MA plans’ focus on preventive services results in lower utilization of high-cost health care services, lower overall costs for high-need beneficiaries, and consistently better quality outcomes for similar groups of Medicare beneficiaries, including dual eligible and clinically complex beneficiaries. The findings provide new evidence that MA beneficiaries with chronic conditions experience better quality of care and quality of life than similar FFS Medicare beneficiaries, and MA plans achieve this at lower cost for the most high-need beneficiaries including those who are clinically complex, have more clinical and social risk factors, and/or have dual eligible status.
Sean Creighton, Managing Director
Creighton is responsible for leading advisory services work tied to Medicare Advantage, risk adjustment, and related issues at Avalere, an Inovalon company. His extensive experience with claims data and application of Avalere’s modeling and analytics functions enable him to advise clients on their strategic goals.
Prior to Avalere, Creighton was a senior vice president at Verscend Technologies, where he led the development and management of risk adjustment products. Prior to that, he spent 15 years at the Centers for Medicare & Medicaid Services, leading the policy development and implementation of major public programs.
Creighton holds graduate degrees in sociology and statistics from the London School of Economics and Trinity College, Dublin, Ireland, and a BA from the University of Limerick, Ireland.
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