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AHIP study: Medicare Advantage provides better care than FFS Medicare

The health insurance industry’s lobbying group says new government data support its claim that Medicare Advantage provides better coordinated, more efficient care, along with its average 14% higher per-person cost.

America’s Health Insurance Plans (AHIP) says its analysis of data gleaned from the federal Agency for Healthcare Research and Quality (AHRQ) shows 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.

The AHIP analysis comes as the health insurance industry is furiously lobbying Congress in opposition to proposed cuts to Medicare Advantage, which a March MedPAC report said cost about 14% more per person than traditional Medicare. The Congressional Budget Office estimated that Medicare will spend an additional $54 billion through 2012 for Medicare Advantage plan payments above traditional Medicare spending.

“The entire Medicare program, including Medicare Advantage, should be carefully evaluated as part of comprehensive healthcare reform,” says Karen Ignagni, president and CEO of AHIP in Washington, DC. “However, seniors in Medicare Advantage should not be forced to fund a disproportionate share of the costs to reform the healthcare system.”

AHIP says Medicare Advantage is cost-effective because its emphasis on preventive care and disease management for seniors with chronic illnesses keeps their conditions under control and reduces hospitalizations and potentially harmful complications.

Marc Steinberg, deputy director of health policy at Families USA in Washington, DC, says singling out California and Nevada as examples of Medicare Advantage effectiveness is misleading because both states have a long history with Medicare managed care that predates the 2003 creation of Medicare Advantage.

“They are looking at a very specific geographic area that is not representative of the nation as a whole,” Steinberg says. “There are plans in California like Kaiser Permanente that do get pretty good results, and if we could replicate that model across the nation, we might have something. You would hope you would get something for 14% extra.”

The problem is that new Medicare Advantage plans—lured by the higher profit potential—often lack the expertise, staff, capital, networks, and coordination of care that makes Kaiser Permanente so effective, says Steinberg.

The AHIP study analyzed hospital admissions in California and Nevada compiled by AHRQ and compared utilization rates among enrollees in Medicare Advantage plans and Medicare. AHIP says its study factored in age, sex, and 70 Hierarchical Condition Categories that are used in Medicare risk adjustment.

AHIP said the AHRQ data show that:

  • Hospital days were reduced by 30% in California and 23% in Nevada for Medicare Advantage beneficiaries when compared with traditional Medicare enrollees
  • Medicare Advantage readmissions in the same quarter for the same condition were 15% less often in California and 33% less often in Nevada compared to Medicare
  • In both states, Medicare Advantage seniors were 6% less likely than seniors in Medicare to be admitted to the hospital for conditions described by AHRQ as “potentially avoidable,” such as dehydration, urinary tract infection, or uncontrolled diabetes

AHIP says the AHRQ data also found that Medicare Advantage seniors with chronic conditions in California and Nevada:

  • Spent an average of 18% fewer days in the hospital than seniors in Medicare
  • Had an average of 27% fewer visits to the ER than those seniors in Medicare
  • Experienced a 42% lower rate of hospital readmissions than seniors in Medicare
  • Had avoidable admissions that were 13% lower than those seniors in Medicare

AHRQ officials did not dispute the AHIP report, saying they had found similar results on preventable admissions for 13 states. However, the agency added that its latest research—which is still under review—did not find the same favorable results for Medicare Advantage enrollees as in other studies. AHRQ also noted that several studies show Medicare Advantage plans don’t follow the same random selection process that is used for traditional Medicare enrollees, making any accounting for risk variability difficult.

Robert Zirkelbach, spokesperson for AHIP, says California and Nevada were chosen because “those are the only states that have the data publicly available where you can actually track patient readmissions.

“We are trying to see if we can get into other states,” says Zirkelbach. “Right now, California has historically had some of the best data sets in the nation to allow these analyses. We are going to continue to try to get as much data as we can nationally.”