Opponents of the Medicare Advantage system say that CMS is overpaying health plans for managing care, ending up with a higher cost than for a comparable fee-for-service beneficiary. A number of studies have found that Medicare Advantage plans deliver better quality by both process measures and outcomes than does the fee-for-service system, and beneficiaries appear highly satisfied with Medicare Advantage. The plans have become quite popular, with over 25% of beneficiaries enrolled in one and they continue to grow rapidly, in part because they tend to provide a greater level of benefits than does the fee-for-service program. And now new research published by the National Bureau of Economic Research suggests that Medicare Advantage have helpful spillover effects on overall medical spending and utilization. (NBER Paper) The spillover effect occurs because the same providers usually serve Medicare Advantage, fee-for-service Medicare beneficiaries and commercial insureds, and typically when providers are required to handle patients in a certain way by one provider, they tend to take that way of treating to their entire population. The authors used the impact of various Medicare Advantage payment changes to estimate spillover effects. They find that a 10% increase in Medicare Advantage penetration leads to a 2.5% to 4.7% decline in hospitalization costs. The lower costs occurred for traditional Medicare and commercial enrollees. Such a penetration increase also leads to shorter lengths of stay. The study suggests that when considering the best Medicare Advantage payment rates, these spillover effects should be taken into consideration.
✅ Subscribe via Email
About this Blog
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. Mr. Roche is available to assist health care companies through consulting arrangements through Roche Consulting, LLC and may be reached at [email protected].
Healthy Skeptic Podcast
This is an outstanding report on total global drug spending and trends, with projections out to 2025. It helps you understand this important area of health care, which does much...
June 1, 2021
MedPAC 2019 Report to Congress
June 18, 2019
Sidekick Health welcomes new investors, who pumped $55 million into “digital therapeutics”, another over-hyped supposedly disruptive health care trend. This involves the typical phone apps, etc. that will instantly make...
May 7, 2022
A company called Hello Heart raises a fresh $70 million in capital for yet another app that supposedly helps improve management of cardiac health. I despair about the sanity of...
May 3, 2022
Having private investors own health care facilities isn’t all bad. They may jack prices up mercilessly, but they don’t appear to hurt outcomes for care and may even improve them,...
April 30, 2022
Access ACO Care Management Chronic Disease Comparative Effectiveness Consumer Directed Health Consumers Devices Disease Management Drugs EHRs Elder Care End-of-Life Care FDA Financings Genomics Government Health Care Costs Health Care Quality Health Care Reform Health Insurance Health Insurance Exchange HIT HomeCare Hospital Hospital Readmissions Legislation M&A Malpractice Meaningful Use Medicaid Medical Care Medicare Medicare Advantage Mobile Pay For Performance Pharmaceutical Physicians Providers Regulation Repealing Reform Telehealth Telemedicine Wellness and Prevention Workplace