AHIP Study: Medicare Advantage Provides Better Care Than FFS Medicare

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

America's Health Insurance Plans says its analysis of data gleaned from the federal Agency for Healthcare Research and Quality shows that seniors enrolled in Medicare Advantage programs in California and Nevada spent fewer days in the hospital, had fewer hospital re-admissions, and were less likely to have potentially avoidable admissions for common conditions like uncontrolled diabetes and dehydration when compared with seniors enrolled in traditional fee-for-service 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 (see p. 252) said cost about 14% more per person than traditional Medicare. The Congressional Budget Office estimated that Medicare will spend an additional $54 billion from 2009 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/CEO of AHIP. "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, 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 predate 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, Steinberg says, 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 KP so effective.