Medicare Advantage and Inappropriate Utilization

Many Medicare Advantage plans pay their contracted provider groups some form of at risk payment–capitation, by which the provider receives a set dollar amount each month for a person, or a percent of premium attached to the patient.  These payments may cover all the benefits under the plan or just the services rendered by the provider, or some in-between mix.  There are other forms of risk-sharing, in which a spending target is set and the provider may get paid more or less for being under or over the target.  The Medicare Advantage plans like risk payments because they provide certainty in cost and they are believed to incentivize providers to be more prudent in the care they deliver or order.

A new study in the Journal of the American Medical Association tests this assumption.  The researchers looked at utilization patterns before and after a provider organization entered into either a full risk or partial risk arrangement with a Medicare Advantage health plan.  In comparison to provider organizations that did not enter into such a contract, the ones that did showed no significant change in utilization patterns  and did not have lower use of what are considered 26 low-value services.  There was a minor reduction in ER usage.  So much for that theory as well, although it may take a long time for behavior changes to set in, even with a large financial incentive.   (JAMA Study)