Traditional Medicare could have saved $7 billion from 2019 to 2023 across four services had it mirrored Medicare Advantage’s utilization rates and fraud strategies, according to a December Berkeley Research Group report sponsored by Elevance Health.
Because MA plans are responsible for tracking spending across Medicare Parts A and B, these plans rely on certain protective measures, such as prior authorization or step therapy, fraud unit findings, coverage policies on intensity of services, and capitated rates for total cost of care in negotiated provider contracts. The HHS Office of Inspector General highlighted skin substitutes, catheters, genetic testing and off-the-shelf orthotic braces as particularly subject to fraud, waste and abuse.
Researchers found that traditional Medicare spent 1.5 to 6.5 times more on skin substitutes in this time frame, or more than $5.6 billion, compared to Medicare Advantage. This category had the greatest potential for savings.
From 2021 to 2022, curved tip catheter use increased 88% in traditional Medicare, versus just 3% in MA. More than $500 million in savings could have been realized.
Medicare Advantage plans also had more guardrails to verify the necessity of certain genetic tests, such as CPT 81408, which assesses several rare diseases that may materialize in childhood. An earlier OIG review found the test had a $2,000 Medicare payment rate and had weaker oversight from CMS’ Medicare administrative contracts. Once coverage guidance strengthened, traditional Medicare utilization dropped to the same level as MA’s.
Medicare Advantage users and spend per 1,000 enrollees were roughly 25% to 30% lower than traditional Medicare’s utilization of off-the-shelf braces. Savings could have amounted to nearly $400 million.
“The findings show how MA plans are leading the way on addressing fraud, waste and abuse,” Jennifer Kowalski, the vice president of the Elevance Health Public Policy Institute, told Becker’s. “As policymakers consider ways to address fraud, waste and abuse in Traditional Medicare, broader adoption of MA strategies can protect both beneficiaries and the overall Medicare program from unnecessary spending and lead to significant taxpayer savings.”
Berkeley Research Group used 100% Medicare fee-for-service claims and MA encounter data records to find total utilization and rates per 1,000 beneficiaries. Researchers evaluated potential savings by estimating traditional Medicare spending based on Medicare Advantage utilization rates.
