July 11, 2018

Research at a Glance: A Comparative Overview of Medicare Advantage and Traditional Fee-For-Service Medicare

According to the Centers for Medicare and Medicaid Services (CMS), Medicare will spend more than a trillion dollars by 2022, half of which will be spent on just 15 percent of beneficiaries. That 15 percent is comprised of the sickest and highest-need beneficiaries, who are high utilizers of health care and managing multiple chronic conditions. To meaningfully address the rapid cost growth in Medicare, high-need beneficiaries must have access to the care they need.


This week, Avalere released a new report that begins to offer answers to the question of how best to meet the health needs of the high number of Medicare beneficiaries with chronic conditions. The report analyzed how Medicare Advantage and FFS Medicare compare on demographics, spending, utilization and quality outcomes in caring for individuals with select chronic conditions – hypertension, hyperlipidemia, and diabetes. These three chronic conditions were selected because they are highly prevalent in both the Medicare Advantage and FFS Medicare populations, they are clinically related, and they are known to drive significant spending in Medicare.


The study found Medicare Advantage performed better relative to FFS Medicare on a range of utilization, cost, and quality outcome measures, despite having a higher prevalence of beneficiaries with certain clinical and social risk factors that are known to predict higher spending. The study examines nationally representative samples of Medicare Advantage and FFS Medicare beneficiaries with one or more of the three selected chronic conditions.


Key findings include:

  • Medicare Advantage had more beneficiaries with risk factors known to impact health outcomes and drive spending, including higher rates of serious mental illness and higher rates of substance abuse disorders than FFS Medicare.
  • Despite higher rates of clinical and social risk factors, Medicare Advantage beneficiaries had similar rates of hospital readmissions and overall costs to FFS Medicare.
  • Medicare Advantage beneficiaries had significantly fewer inpatient stays, emergency care services, and preventable complications than comparable patients in FFS Medicare.
  • Medicare Advantage beneficiaries with chronic conditions had higher rates of preventive screenings (such as LDL testing)
  • Medicare Advantage outperforms FFS Medicare on caring for more clinically complex patients, including dual eligible beneficiaries.


This report builds on the current body of research on Medicare Advantage and shows improved health outcomes and lower costs for high-need beneficiaries. Few previous studies have offered such a large, national comparative analysis on the effectiveness of Medicare Advantage as compared to FFS Medicare.


This study’s findings corroborate and build on previous research, including;


  • A 2016 RTI International analysis of the delivery of services for individuals dually eligible for Medicare and Medicaid in Minnesota found beneficiaries were 48 percent less likely to have a hospital stay, consistent with Avalere findings that dually eligible beneficiaries had 23 percent fewer inpatient stays and 33 percent fewer emergency room visits than FFS Medicare.
  • A 2012 study published in Health Affairs  found Medicare Advantage utilization rates were 20-30 percent lower in emergency settings, suggesting patients were being treated in primary care or urgent care settings.


The Avalaere research also found Medicare Advantage beneficiaries, with similar health status, had more clinical and social risk factors than FFS Medicare beneficiaries, yet received higher quality care. This  refutes questions occasionally raised in the media about whether Medicare Advantage beneficiaries are healthier and whether health plans are as effective as FFS Medicare in caring for sicker beneficiaries. Instead, the Avalere findings reveal that beneficiaries with the three most prevalent chronic conditions amongst Medicare beneficiaries received higher quality care, including greater use of preventive services and tests and lower rates of disease-related complications.


This blog is the first in a series that will delve into the Avalere findings in more detail. To review the full research report, see it here.


To better understand how Congress and the Administration can act to protect and strengthen Medicare Advantage, please visit the Better Medicare Alliance policy resource library and sign up for our policy alerts.


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