Medicare Advantage outperforms fee-for-service on cost of care, quality

The overall cost of care for Medicare fee-for-service beneficiaries is 16.7% higher than Medicare Advantage beneficiaries when it comes to caring for dual eligible beneficiaries, according to a recent report from Avalere. In addition, MA outperformed Medicare FFS when it came to quality measure outcomes and utilization of high cost health services, including inpatient and emergency rooms.

The findings suggest that MA plans may have the upper hand when it comes to managing care for the dual eligible population, which includes those who are eligible for both Medicare and Medicaid. Avalere’s research team examined a sample of more than 1.5 MA beneficiaries and 1.2 million FFS Medicare beneficiaries with one or more of three chronic conditions––hypertension, hyperlipidermia and diabetes––to conduct its analysis.

Deeper dive

The annual healthcare cost for MA dual beneficiaries came in at $11,159, compared to $13,398 for FFS dual eligible beneficiaries. However, MA had higher costs for non-duals than FFS––$9,177 and $8,357, respectively, according to Avalere.

There were some key differences in the utilization of care between the two groups that contributed to overall quality and cost results. For instance, MA dual eligibles has 11.7% more office visits than FFS beneficiaries, but also had about 33% fewer hospitalizations. MA beneficiaries has had 42% fewer emergency room visits. The higher hospitalization and ER usage among the FFS group drove the higher overall costs compared to MA. Though, in non-dual eligible beneficiaries, MA plans had higher overall costs than FFS due to higher use of physician services and tests.

The higher use of physician services could be helping drive better quality in MA dual eligible beneficiaries, as those with diabetes in this group had 49% fewer complications and 71% fewer serious complications than their FFS counterparts. With a 17% higher rate of LDL testing, MA dual eligibles are reaping the benefits of more preventive care than those in FFS. Furthermore, only half of dual eligibles in FFS Medicare received preventive breast cancer screenings compared to 73% of MA beneficiaries.

However, other recent research suggests that enrollees in MA plans may have lower costs prior to getting into one of these plans compared to traditional Medicare FFS. This could undermine the ability of MA plans to truly provide higher quality care with lower overall costs as a result of their models.

According to Avalere, MA plans may be dealing with more, as their population actually had higher social and clinical risk factors, such as more dual eligible/low income beneficiaries, more beneficiaries under 65 who qualified as a result of a disability, and higher rates of substance abuse and serious mental illness.

“These factors have been shown to be associated with greater disease burden, higher needs, increased spending, and worse outcomes,” the analysis reads.