Managed Care Medicare Plan Hospital Readmission Rates

An article in the American Journal of Managed Care examines hospital readmission rates in the Medicare Advantage and Medicare fee-for-service programs.   (AJMC Article)  The researchers used a database that covered about a fourth of Medicare Advantage members for 2006-2008 and the Medicare 5% sample database for fee-for-service beneficiaries.  Medicare Advantage plans are paid a fixed amount for arranging and paying for beneficiaries’ care, so they have an incentive to manage readmissions and should therefore show lower readmission rates.  The results of the study found that they achieved that result.   The researchers performed their analysis on an unadjusted basis and also on an adjusted basis that compared expected readmission rates for the population to the actual ones.  The authors point out that given that Medicare Advantage plans try to keep people out of the hospital, those Medicare Advantage members who are admitted might actually be sicker on average than the fee-for-service beneficiaries who are admitted to a hospital for treatment.  The primary outcome was 30-day readmissions, but 60 and 90-day rates were also examined.

The Medicare Advantage plans showed very consistent readmission rates across all three years of the study.  The overall 30-day readmission rate was 14.5%, compared to the fee-for-service one of 19.6%, or about 25% lower.  The 60-day and 90-day rates were also about 25% lower.  Using an alternative calculation method gave a similar result.  Adjusting for age differences in comparative enrollment left the result unchanged.  Adjusting for expected readmission rate based largely on health status, lowered the difference in readmission rates to somewhere around 13-22%.  The most notable result of the research is that it validates that reductions in readmissions are possible.  Medicare Advantage plans have already achieved the reductions in readmissions that CMS is hoping to see in the FFS population through its penalty program.  And this in the context of lower overall use of hospitalization to begin with.  Probably be smarter to just put all the beneficiaries in Medicare Advantage.  An interesting general point raised by this research is that while Medicare Advantage plans are often criticized for “cherrypicking” healthy enrollees, it may be that the people in Medicare Advantage plans are healthier because of the good work the plans do in managing their care and health.