Medicare Advantage Leading the Way on Value Based Care for Seniors


In 2015, Congress passed legislation to change the way physicians and other practitioners are paid by Medicare to move the health care system away from fee-for-service (FFS) to payments based on value. The legislation, called the Medicare Access and CHIP Re-authorization Act (MACRA)  is intended not only to change the way physicians are paid, but to improve health care for American seniors.

Congress recognized that changing the payment system to providers is key to achieving patient-centered, coordinated health care that prioritizes quality and improves health.  Their answer is to move away from FFS which rewards volume over value to “Alternative Payment Models” (APMs) which will use variety of payment reforms to enable and motivate changes in clinical care practices.

Since passage of the law, there has been much discussion on how to define APMs as well as keen anticipation of the rules and regulations that will be written to implement the law. The Center for Medicare and Medicaid Services (CMS) is accepting public input, studying alignment between public and private programs, examining levels of risk in existing innovative arrangements, and assessing the impact of external market forces.  CMS recently called for comments by issuing a lengthy “Request for Information” to interested parties regarding these changes to physician payment.

Better Medicare Alliance (BMA) submitted a response to the Request to highlight the experience under Medicare Advantage (MA) in moving towards value based payments agreements for physicians providing care for MA beneficiaries. Medicare Advantage is demonstrating the opportunity for high quality care that is achieved through successful alternative provider payment arrangements.

MA plans are working with providers and health systems to change the way they are paid to enable them to take on the responsibility and financial risk needed to change the way care is provided to patients. The changes enable practitioners to focus on the patient’s needs rather than the services that are reimbursed by Medicare.  Health care practitioners are encouraged to provide appropriate care, in the best setting for the patient. Primary care teams, care coordination, disease management, home visits, and supportive services are all employed to better ensure patient engagement and more integrated care. Quality is measured and publicly reported.

And, evidence shows that it is working for providers and beneficiaries. MA plans are closing gaps in patient care, encouraging preventive services, and improving care coordination.  This approach has delivered real value for seniors.  Not only are MA beneficiaries highly satisfied, but studies show that patients enrolled in MA have a lower incidence of preventable hospitalizations than those enrolled in Medicare FFS.[1] Overall, Medicare Advantage used fewer hospital resources than Medicare FFS by averaging a shorter length of stay and a lower total cost per hospitalization.[2]  As for chronic disease, a comparative analysis in 2012 found that people with diabetes in Medicare Advantage chronic condition special-needs plans—particularly nonwhite beneficiaries—had lower rates of hospitalization and readmission than their peers in Medicare FFS.[3]

This evidence has led MA plans to set ambitious goals to expand value-based provider agreements to more of their providers. The goals are closely aligned with those of CMS in the APM model. For example, Aetna has set a goal to reach 75% of its medical spending in MA to value-based contracting by 2020.[4] Humana aims to have 75% of its Medicare Advantage enrollees in value-based care models by 2017.[5] United Healthcare expects value-based care arrangements for its enrollees to reach $65 billion by the end of 2018.[6]

The capacity within the MA program to drive value based payments arrangements will be critical in enabling CMS to meet its goals.  BMA encouraged CMS to recognize that MA is well positioned to advance the shared goal to move providers to vale based payment agreements. And, BMA encouraged CMS to engage MA plans, practitioners, aging service providers, and senior advocacy organizations.

As a coalition of advocates, beneficiaries, plans, and providers with a deep understanding of how value-based models in MA are improving care, BMA is committed to further advancing the critically important goals of improving value in Medicare.  Ensuring that MA is an option under the APM model is a step towards meeting the needs and improving the health status for American seniors.


[1] Enrollment in Medicare Advantage managed care plans reduces racial/ethnic disparities in primary care quality in some States: Research Activities, December 2011, No. 376. December 2011. Agency for Healthcare Research and Quality, Rockville, MD.


[2] Bernard Friedman, Ph.D., H. Joanna Jiang, Ph.D., and C. Allison Russo, M.P.H Medicare Hospital Stays: Comparisons between the Fee-for-Service Plan and Alternative Plans, 2006, HCUP Statistical Brief #66, January 2009


[3] Robb Cohen, Jeff Lemieux, Jeff Schoenborn, Teresa Mulligan, “Medicare Advantage Chronic Special Needs Plan Boosted Primary Care, Reduced Hospital Use Among Diabetes Patients,” Health Aff January 2012 vol. 31 no. 1 110-119the end of 2018.[3]

[4] Japsen, Bruce. “Value-Based Care Will Drive Aetna’s Future Goals.” Forbes, May 15, 2015.

[5] Walker, Tracey. “Humana provider tools aid value-based care.” Managed Healthcare Executive, April 3, 2015.

[6] UnitedHealth Group, “More than 11 Million People Can Now Receive Health Care Services from Care Providers Paid by UnitedHealthcare Based on Quality and Patient Outcomes.” February 17, 2015.

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