Why Medicare Advantage beneficiaries have lower healthcare utilization: 3 things to note

Medicare Advantage beneficiaries have 12 percent lower healthcare expenses than beneficiaries in fee-for-service Medicare, a whitepaper from researchers at Inovalon and Boston-based Harvard Medical School found. 

The whitepaper, published Sept. 20, compared utilization rates and expenses for beneficiaries transitioning to Medicare from private insurance in Inovalon's database. Inovalon, a cloud-based healthcare software company, has data for around 30 percent of privately insured commercial lives in the U.S., according to the whitepaper. 

"Our research credibly and definitively measures the efficacy of MA relative to FFS and indicates that the MA program is making healthcare more efficient without sacrificing quality of care for patients," Boris Vabson, PhD, health economist at Harvard Medical School and a lead researcher on the whitepaper, said in a Sept. 20 news release

Here are three findings to note: 

  1. Average quarterly healthcare spending jumped around 20 percent in the first quarter after beneficiaries transitioned to traditional Medicare from commercial insurance. This increase was smaller, around 15 percent, for MA beneficiaries. 

  2. After two years of enrollment in Medicare, FFS beneficiaries' quarterly utilization was 35 percent higher on average than in commercial insurance. For MA, utilization returned to around 15 percent higher than the commercial baseline after two years of enrollment. 

  3. Inpatient spending accounted for much of the difference between the programs, the researchers wrote. Medicare Advantage members had around 50 percent fewer inpatient stays and 22 percent fewer emergency department visits compared to FFS enrollees. MA enrollees had 7 percent fewer physician office visits compared to FFS, and the two groups had similar utilization for outpatient care and prescription medications. 

Read the full whitepaper here.

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