New Research: Medicare Advantage Risk Models Improve Care for All Seniors
Two new studies recently published in JAMA Network Open and The American Journal of Managed Care demonstrate that risk-based care arrangements in Medicare Advantage lead to fewer hospital admissions, reduced emergency room visits, and better overall health outcomes for both Medicare Advantage beneficiaries and Fee-for-Service Medicare beneficiaries. The research – conducted by America’s Physician Groups, Optum Health Translational Science, and CareJourney – examined the outcomes for patients when physician groups operate under two-sided risk payment arrangements with Medicare Advantage payers. The fact that physician groups in these arrangements are fully accountable for the quality and costs of care for patients – and have the resources to develop systems of advanced primary care – leads to these superior outcomes. Better Medicare Alliance was pleased to have the opportunity to learn more about the findings from APG President and CEO Susan Dentzer.
Better Medicare Alliance: The first study found that patients whose physicians assumed full risk for the quality and costs of their care were less likely to be admitted to the hospital for common chronic conditions or visit the emergency room compared to patients whose physicians weren’t in these two-sided risk arrangements in Medicare Advantage but were paid on a conventional Fee-for-Service basis by Medicare Advantage plans. The results for the patients cared for within the risk models were superior compared to the patients cared for by physicians who were paid on a Fee-for-Service basis by Medicare Advantage plans. Why are these findings important?
Susan Dentzer, APG President and CEO: These findings show how holding physician groups accountable, as with the two-sided risk arrangements examined in this study, encourages comprehensive care and high-value services that ultimately keep patients healthier. The patients cared for under the risk arrangements were 8.7 percent less likely to be hospitalized or to visit emergency departments. They were between 8-22 percent less likely to be hospitalized for chronic conditions such as diabetes, high blood pressure, chronic obstructive pulmonary disease, and heart failure.
The bottom line is that when Medicare Advantage plans and provider groups partner closely in this way through risk arrangements – with plans making capitated payments to physician groups and thus transferring to them full accountability to manage care cost-effectively – the physician groups have the maximum incentives to take the steps necessary to help produce these superior outcomes for patients. A virtuous cycle then ensues. Physician groups gain the resources up front to develop advanced primary care – to hire care coordinators, bring on board social workers and pharmacists, and invest in the kinds of systems that enable them to offer proactive and preventive care to patients. Physician groups in these arrangements also work more closely with community organizations and social workers to address non-medical needs that bear on health, such as access to food and transportation.
All of these capabilities enable older adults, especially those with chronic illnesses, to stay as healthy as possible and out of the hospital. Avoiding unnecessary use of emergency departments, costly hospital stays, and avoidable re-admissions not only achieves savings, but can allow more resources to be directed back into further enhancing primary care.
BMA: The second study, published in The American Journal of Managed Care, found that the care strategies adopted by physician groups in the same two-sided Medicare Advantage risk arrangements had a “spillover effect,” such that patients in Fee-for-Service Medicare who received care from the same groups also had better outcomes. What are the key takeaways from this study?
Dentzer: This is perhaps the most exciting finding, because it shows that when providers focus on high-quality, cost-effective care under these payment arrangements with Medicare Advantage plans, the benefits of accountable care aren’t limited just to Medicare Advantage enrollees. The advanced care practices these models make possible — like team-based approaches, proactive outreach, and enhanced care coordination — constitute the way physicians practice for all their patients.
In some respects, the results from this study were even better than the first one. The research showed that Fee-for-Service Medicare beneficiaries served by physicians with high Medicare Advantage risk “exposure,” as it were, were 21 percent less likely to have emergency department visits and 9-22 percent less likely to be hospitalized for chronic conditions. They were also an astounding 82 percent more likely to have annual wellness visits. In other words, physicians in Medicare Advantage risk payment arrangements don’t just transform care for individuals in those specific payment models — they can fundamentally change how medicine is practiced across entire patient populations.
BMA: How do these accountable relationships enable physicians to provide better care?
Dentzer: The financial framework of these arrangements in effect directly passes on from Medicare Advantage plans to physician groups a share of the resources derived from risk-adjusted per-beneficiary payments from the government along with funding from Medicare Advantage’s quality bonuses. Because these payments from Medicare Advantage plans to physician groups are essentially capitated, physician groups have both the resources and decision-making authority to expend these resources in ways that will deliver cost-effective, high-quality care and optimal health outcomes for patients. They can build health care teams and practice care in ways that simply aren’t possible under traditional Fee-for-Service payment. These capabilities include having care managers who follow up with high-risk patients, sophisticated data analytics that identify care gaps, integration of primary care, and behavioral health care providers such as psychologists and social workers, and partnerships with community-based organizations or others to address health-related social needs.
Many of these groups also offer expanded telehealth options and advanced, hospital-like care at home for patients who need it, buttressed by robust remote monitoring programs. But rather than waiting for patients to become sick and seek care, they proactively reach out to ensure preventative services are delivered and chronic conditions are well managed. This shift from reactive to proactive care is transformative for both patients and physicians. Our physician groups operating in these models believe they are truly incentivized to practice medicine as it should be delivered, and according to what brought them into health care in the first place: to truly put patients first.
BMA: What should these results mean for legislators and policymakers?
Dentzer: With these results, policymakers have clear evidence that building on the positive outcomes of Medicare Advantage’s value-based arrangements can benefit both Medicare Advantage enrollees and the entire Medicare program. Not only are patients in traditional Medicare better off because of the spillover effects, but our research team has estimated that the savings that would accrue to the Medicare program if all physicians treating Medicare patients practiced in these models could total $22 billion annually. That’s a powerful argument for accelerating adoption across Medicare Advantage of this payment model while assuring that physician groups achieve meaningful accountability measures for quality and outcomes.
BMA: Which aspects of this research were most surprising?
Dentzer: I would say that the results were less surprising than they were gratifying. Our groups practicing in these two-sided risk models in Medicare Advantage have long believed that they produced superior outcomes for patients. But believing that message is nowhere near as good as having the results that prove it. These risk models don’t just lead to incremental improvements – they fundamentally change how care is delivered. By aligning incentives, fostering collaboration, and enabling investments in proactive, patient-centered care, these arrangements create the capacity for both Medicare Advantage and Fee-for-Service Medicare beneficiaries to experience better outcomes. The research underscores that when providers and plans share financial responsibility for care quality and cost, they are empowered to deliver more coordinated, efficient, and preventive care—benefiting not just individual patients, but the entire Medicare system.