Hospitalization Rates and Costs in the MA Program

By April 13, 2017Commentary

As the Medicare Advantage option for Medicare beneficiaries has continually added enrollment, more research is being done to understand differences in utilization, costs and outcomes between the MA program and the traditional, fee-for-service part of Medicare.  A new study published in the Medical Care Research & Review examines hospitalization rates and costs.   (Med. Care Article)   The authors used 2013 data from the Healthcare Cost and Utilization Project databases for their analysis.  These databases cover 28 states.  The researchers examined length of stay, costs and readmissions.  Hospitalizations were reviewed on an overall basis and by service line–mental health, injury, medical and surgical.  Various hospital, patient and market characteristics were taken into account in the adjusted analyses.  At a high level, hospitalizations for those in the MA program were more to be for male, younger, non-white and poorer patients.  Hospitalizations for fee-for-service Medicare beneficiaries were more likely to be for dually eligible patients, those with more chronic conditions and to have come from a nursing home.  MA stays were more likely to have originated in an ER or to be a surgical admission and less likely to be an elective admission.  Traditional Medicare patients were more likely to have used a public or non-profit hospital, while MA ones were more likely to have a stay at a large hospital or one that is part of a system.

Medicare Advantage stays cost more for injury and surgical admissions, but were lower for mental health stays.  Although the authors failed to fully explicate the result, it appears that length of stay may be a factor in these cost differences, as length of stay for longer for MA patients for injury and surgery admissions but lower for mental health stays.  On an adjusted matching basis, length of stay was also higher in MA for medical admissions, which is the most common admission type.  For some reason, perhaps because they don’t know the total populations, just the ones that used the hospital, the researchers failed to identify a hospitalization rate.  This obviously is important in terms of understanding total inpatient spending and length of stay differences between the program types.  It is almost certainly true, as other research suggests, that MA plans have lower hospitalization rates.  This would mean that generally more complex, and therefore more costly, patients are the ones who get hospitalized in MA.  When the admission cause is mental health issues, medical or surgical, the plans are focused on using lower cost, outpatient settings wherever possible.  Although readmission rates were lower for MA plans, this difference was generally not statistically significant.  One other interpretation of the results is that as MA has become over a third of the total Medicare population, hospitals are experiencing spillover effects in which they adapt the managed care processes they are subjected to by MA plans to all Medicare beneficiaries.

Author Kevin Roche

The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry through Roche Consulting, LLC. Mr. Roche is available to assist health care companies through consulting arrangements and may be reached at khroche@healthy-skeptic.com.

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