Medicare Advantage versus Fee-for-Service

In a 2010 report to Congress, MedPAC indicated that Medicare Advantage costs 14% more per person than traditional Medicare. America’s Health Insurance Plans (AHIP) counters that the best available government data show that Medicare Advantage provides better coordinated, more efficient care. Using data from the federal Agency for Healthcare Research and Quality (AHRQ), the AHIP analysis suggests that seniors enrolled in Medicare Advantage programs in California and Nevada spent fewer days in the hospital, had fewer hospital readmissions, and were less likely to have potentially avoidable admissions for common conditions, such as uncontrolled diabetes and dehydration, when compared with seniors enrolled in traditional fee-for-service (FFS) Medicare.
 

California and Nevada were chosen because they are among the only states that make the data tracking patient readmissions publicly available. However, because these two states have long histories with Medicare managed care programspredating the 2003 creation of Medicare Advantage, the conclusions based upon this data may not be applicable to the nation as a whole. AHIP says that Medicare Advantage is cost-effective because its emphasis on preventative care and disease management for seniors with chronic illnesses keeps their conditions under control and reduces hospitalizations and potentially harmful complications. AHRQ officials do not dispute the AHIP report; in fact, they say that they have discovered similar preventable admissions results in thirteen states. However, the agency reports that its latest research – which is still under review – appears not to find the same favorable results for Medicare Advantage enrollees as in other studies and that, because Medicare Advantage plans do not follow the same random selection process that is used for FFS enrollees, any accounting for risk variability is difficult.

 

A National Coalition on Health Care spokesperson said that the controversy surrounding the use of California and Nevada data underscores the need for immediate action to improve national data collection and analysis as the foundation for a more effective and quantifiable means for improving care quality and controlling health care spending.

 

Click here for the AHIP press release.

 

Click here for the AHIP study, “Using State Hospital Discharge Data to Compare Readmission Rates in Medicare Advantage and Medicare’s Traditional Fee-for-Service Program Innovations in Reducing Preventable Hospital Admissions, Readmissions, and Emergency Room Use.”

 

Click here for MedPAC’s report, “The Medicare Advantage Program.”

 

Click here for MedPAC’s “Report on Comparing Quality Among Medicare Advantage Plans and Between Medicare Advantage and Fee-for-Service Medicare.”