There have been several recent papers on comparative health risks and spending in the Medicare Advantage and Medicare fee-for-service programs. Avalere contributes to the literature with a report looking at relative utilization in regard to beneficiaries with chronic conditions. (Avalere Paper) The data is from 2015 and includes beneficiaries with one or more of hypertension, hyperlipidemia or diabetes. The Medicare Advantage plans had more enrollees with chronic conditions who were disabled, 36% versus 22% for fee-for-service; who were dual eligibles, 23% versus 20%; who had serious mental illness, 9% compared to 5%, and who had alcohol or substance abuse issues, 7% versus 6%. This suggests, contrary to other work, that MA has a population with more health needs. Notwithstanding this, in the respective cohorts, MA plans had 23% fewer inpatient stays and 33% fewer ER visits. Overall spending was similar, but that was because the MA plans spent significantly more on preventive services, $3811 annually per beneficiary versus only $3139 in the fee-for-service program.
In regard to quality, the MA program also outperformed. This included 29% fewer avoidable hospitalizations, 5% more cholesterol level screenings and 13% more breast cancer screenings. The record was even stronger for the sickest, most complex beneficiaries. And in regard to dual eligibles with chronic conditions, MA plans delivered 17% annual spending savings, with 33% fewer hospitalizations and 42% fewer ER visits. Astounding in a way. And there were 49% fewer potentially avoidable hospitalizations and much higher rates of preventive services, such as 46% more breast cancer screening. So MA plans are actually doing some of their best work in regard to dual eligibles and more complex patients. The program and its reimbursement methods aren’t perfect, but MA clearly delivers better managed care and does more to improve the health of beneficiaries, which is the whole point of having health insurance. Given the already high penetration of the program, Congress should think seriously about how to move many more beneficiaries into it and eventually the whole program should be MA. Oh, and did I mention that beneficiaries typically get better benefits and have less total out-of-pocket spending under MA.