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Medicare Advantage Savings, Outcomes Exceed Fee-For-Service

The Medicare Advantage program outperformed Medicare fee-for-service in terms of positive member outcomes and lower costs of care.

Medicare Advantage outperformed fee-for-service

Source: Thinkstock

By Thomas Beaton

- The Medicare Advantage (MA) program has surpassed Medicare fee-for-service (FFS) in developing positive member healthcare outcomes and reducing care costs, according to an analysis of both programs from Avalere Health.

Medicare Advantage beneficiaries had 23 percent fewer inpatient stays and 33 percent fewer emergency room visits than Medicare fee-for-service beneficiaries during 2015. Inpatient spending was 17 percent lower in Medicare Advantage than Medicare fee-for-service ($2898 in MA versus $3477 in FFS), and outpatient spending was 5 percent lower in MA.

In addition, spending on diabetes care in the MA program was 6 percent lower than in Medicare FFS.

The team found that annual spending per beneficiary on preventive care services was 21 percent higher in Medicare Advantage than Medicare FFS. Medicare Advantage is more likely than FFS to spend on preventive services in order to prevent the development of more costly chronic diseases.

The Medicare Advantage also enrolled a greater proportion of members with social risk factors than Medicare fee-for-service.

Thirty-six percent of Medicare Advantage membership population had a known disability, compared to 22 percent within Medicare FFS.

The Medicare Advantage program enrolled 23 percent of low-income dual-eligible beneficiaries (members that receive Medicaid and Medicare benefits), who have a higher likelihood of developing chronic conditions than non dual-eligibles or higher income members. In comparison, the Medicare FFS program enrolled 20 percent of low-income members that receive Medicare and Medicaid benefits.

MA also enrolled a significantly greater proportion of ethnic and racial minorities than Medicare FFS. Minorities represent 31 percent of Medicare Advantage member population compared to 15 percent of all Medicare FFS members.

Medicare Advantage also outperformed Medicare fee-for-service when it came to improving healthcare outcomes, even though MA had a greater proportion of high-risk beneficiaries.

Medicare Advantage beneficiaries with complex diabetes-related conditions had a 52 percent lower rate of care complications than Medicare FFS beneficiaries, as well as a 73 percent lower rate of serious care complications.

Compared to Medicare FFS, Medicare Advantage had a 29 percent lower rate of all potentially avoidable hospitalizations, 41 percent fewer avoidable acute hospitalizations, and 18 percent fewer avoidable chronic hospitalizations.

The study indicates that Medicare Advantage is a more cost-effective payer program than Medicare FFS for treating older beneficiary populations with multiple chronic conditions.

Chronic condition prevalence in Medicare Advantage, Medicare Fee-for-Service

Source: Avelere Health

Medicare Advantage has roughly 500,000 more beneficiaries than the Medicare fee-for-service program, but each program has nearly the same prevalence of chronic diseases in their populations.

Both MA and Medicare FFS population have a diabetic population that represents 32.6 percent of all beneficiaries. The Medicare fee-for-service program only has a slightly greater proportion of members with hypertension than MA.

Healthcare payers that have a higher proportion of older health plan members with multiple chronic conditions are more likely to contain healthcare costs through Medicare Advantage, the team concluded.

“These results [of the study] indicate that Medicare Advantage focuses on driving utilization of preventive services and interventions designed to better manage select chronic conditions,” the study authors said.

“This focus [of preventive care and interventions], along with Medicare Advantage plans’ care coordination efforts, may avert preventable complications, hospitalizations, and emergency care services and result in better health outcomes and lower overall cost to Medicare for the growing population of high-need, high-cost beneficiaries.”

Since 2006, Medicare Advantage revenues have tripled from $69 billion to nearly $200 billion in 2018.

Individually, healthcare payers have leveraged the program to drive profits upwards of $2 billion during the first quarter of 2018.

Medicare Advantage is an increasingly profitable market opportunity that may increase as enrolled members are more likely to remain health and reduce costly healthcare utilization.


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