Medicare Advantage Beneficiaries See Lower Hospitalization Rates

March 02, 2023 - Medicare Advantage beneficiaries with ambulatory care sensitive conditions (ACSCs) experienced lower rates of hospitalizations but higher rates of emergency department (ED) direct discharges and observation stays than traditional Medicare beneficiaries, according to a study published in JAMA Health Forum.

Medicare Advantage plans may help address wasteful healthcare spending by reducing acute care use for ACSCs, which are conditions that could be avoided when patients have proper access to high-quality outpatient ambulatory care.

However, there have been concerns that reducing hospitalizations may result from shifting acute care sites rather than delivering better care in ambulatory settings.

Researchers used 2018 Medicare Advantage and traditional Medicare data to determine whether Medicare Advantage was associated with lower rates of avoidable hospitalizations and higher rates of observation stays and ED direct discharges for ACSCs compared to traditional Medicare.

The study sample included 2.6 million Medicare Advantage beneficiaries and 7.9 million traditional Medicare beneficiaries. The data reflected ACSC admissions for four acute conditions and eight chronic conditions.

Researchers found that Medicare Advantage beneficiaries were less likely to be hospitalized for ACSCs than traditional Medicare beneficiaries, with a risk-adjusted relative risk (RR) of 0.94. This difference was associated with a lower risk of hospitalization for acute ACSCs, but there was no difference for chronic ACSCs.

The lowest RR among acute ACSCs was for urinary tract infections at 0.77. The RR was 0.84 for dehydration, 0.91 for community-acquired pneumonia, and 0.93 for a perforated appendix.

Among chronic ACSCs, three diabetes-related complication measures had a significantly higher risk of hospitalization in Medicare Advantage.

While Medicare Advantage beneficiaries with ACSCs had an overall lower risk of being hospitalized, they were more likely to experience a direct discharge from the ED and an observation stay than traditional Medicare beneficiaries.

The RR for experiencing an ED direct discharge was 1.27 for acute ACSCs and 1.60 for chronic ACSCs. The risk of ED direct discharge was higher among Medicare Advantage beneficiaries than traditional Medicare beneficiaries for each individual ACSC.

The risk of observation stays was also higher for Medicare Advantage beneficiaries for all acute and chronic ACSCs. The overall RR for experiencing an observation stay was 2.38.

When looking at all episode types, Medicare Advantage beneficiaries were at higher risk of needing care for any ACSC than traditional Medicare beneficiaries.

The results suggest that the lower rate of hospitalizations among Medicare Advantage beneficiaries could be explained by the shift of inpatient care to other settings, like ED direct discharges and observation stays.

Risks for hospitalization, ED direct discharge, and observation stay varied within the Medicare Advantage program.

For example, beneficiaries in Medicare Advantage health maintenance organizations (HMOs) had a lower risk of hospitalization for ACSCs compared to those in preferred provider organizations (PPOs). This difference stems from an RR of 0.87 for acute ACSCs.

Medicare Advantage HMO beneficiaries had a higher risk of ED direct discharge and observation stay for both acute and chronic ACSCs. HMOs are typically more restrictive with network sizes and referral requirements, researchers noted.

The study findings could indicate that Medicare Advantage plans are more effective in using tools like prior authorizations to ensure that patients receive care from the lowest cost site of care allowed. In 2018, 70 percent of Medicare Advantage beneficiaries were in a plan that required prior authorization for inpatient hospital stays.

Site shifting may explain why Medicare Advantage had fewer admissions for acute ACSCs but not chronic ACSCs, as acute ACSCs may be easier to treat in outpatient settings.

Although site shifting aims to avoid the high out-of-pocket costs stemming from inpatient hospitalizations, there are concerns that Medicare Advantage beneficiaries could also incur higher costs from the outpatient settings.

In addition, the clinical quality patients receive from ED direct discharges and observation stays is unclear. 

“If shifting care to lower-cost settings is not negatively affecting quality or outcomes, this trend could reflect an important mechanism for cost savings,” researchers wrote. “Overall, further research is needed to elucidate how these patterns affect long-term patient clinical trajectories, and ultimately clarify whether the potential cost efficiencies of site shifting are occurring alongside tradeoffs in care quality.”