Medicare Advantage Plans Have Lower Hospitalizations Than Medicare FFS Plans

Individuals with Medicare Advantage (MA) plans have lower hospitalization rates than those with traditional fee-for-service Medicare (TM) plans, according to a study from Robert Graham Center.

Although earlier studies have indicated this trend before, the results have not always been interpreted in similar ways. Proponents of MA plans, for instance, see lower hospitalization rates as evidence of better care management, with an especial focus on preventive services and primary care. Those opposed to MA plans argue that these lower rates show a selection bias that tends towards healthier enrollees, or else can be attributed to other external factors.

A team of researchers, led by Stephen Petterson, PhD, reviewed hospital utilization data from the Healthcare Cost and Utilization Project (HCUP) for 12 states in order to compare the effects of MA plans on hospitalizations versus TM plans. Hospitalizations were sorted as avoidable hospitalizations, or those that could have been avoided with better outpatient care; hospitalizations for marker conditions, or those that could not have been avoided by better outpatient care; and referral-sensitive hospitalizations, those that were planned to avoid a worse outcome.

Their sample included just over 3 million discharges, of patients 65 years and older whose primary payer was Medicare. Data was from 2012 or 2013, depending on what was the most recent available as of September 2015. States included were Arizona, Florida, Iowa, Kentucky, Massachusetts, Maryland, Michigan, New Jersey, Nevada, Oregon, Rhode Island, and Wisconsin because their data differentiated between MA and TM plans.

The authors concluded that MA plans reduced avoidable hospitalizations by approximately 10%, even accounting for age, gender, race/ethnicity, region, and other health proxies. Their sample also depicted TM beneficiaries with a 31% higher rate of hospitalizations than MA beneficiaries. In addition, TM beneficiaries’ rates for marker conditions were higher than MA beneficiaries. Enrollees with MA plans were approximately 6% more likely than TM enrollees to have referral-sensitive hospitalizations—typically a sign of better outpatient care.

Researchers also noticed a “spillover effect” on TM beneficiaries. That is, “counties with higher MA penetration rates have fewer avoidable hospitalizations for both MA enrollees and TM beneficiaries, even after controlling for other explanatory factors. In addition, higher MA penetration rates increase referral-sensitive hospitalizations.”

The team recommends further study to account for this effect and see if it is related to payment incentives that promote efficiency, coordination, and primary care with the treatment of MA individuals.