Reform Update: Medicare Managed Care Linked to Overall Savings, Study Finds

Hospital visits are shorter and less costly for all patients in markets with more of them enrolled in Medicare managed care, according to new research. The results suggest hospitals make far-reaching changes to delivery as incentives to better manage care increase.

Incentives to coordinate care prompt investments, such as information technology, and widespread adoption of new delivery models that ultimately benefit all patients, regardless of insurance, a trio of Harvard University researchers wrote in a paper published by the National Bureau of Economic Research.

Hospital costs for enrollees in traditional fee-for-service Medicare would drop by $600 million when the Medicare Advantage market share increases 5 percentage points of the market, according to an analysis of spending at the county level in five states.

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Source: Modern Healthcare

Similar outcomes may be true for other Medicare models—including accountable care and bundled payments under health reform—that seek to incentivize greater care management as managed care does, said Katherine Baicker, a health economics professor at the Harvard School of Public Health, who co-authored the paper with Michael Chernew and Jacob Robbins.