Importance: Medicare Advantage is associated with improved health outcomes, increased care efficiency, and lower out-of-pocket costs compared with fee-for-service (FFS) Medicare. When engaged in 2-sided risk arrangements, physicians are incented to offer high value for patients; however, no studies have explored the quality and efficiency outcomes in 2-sided risk Medicare Advantage models compared with FFS Medicare.
Objective: To compare quality and efficiency of care between physicians using a Medicare Advantage 2-sided risk model and FFS Medicare.
Design, setting, and participants: This retrospective cohort analysis with exact and propensity score-matched design used claims data from January 1, 2018, to December 31, 2019. Participants included beneficiaries enrolled in a Medicare Advantage 2-sided risk model (ie, physicians assumed the financial risk of total costs of care) and those in an FFS Medicare program in a 5% limited data set with part A and B coverage residing in 6 states (Arizona, California, Florida, Nevada, Texas, and Utah). Data were analyzed from February 1 to June 15, 2022.
Exposures: Medicare Advantage 2-sided risk model seen in practices that are part of a nationwide health care delivery organization compared with traditional FFS Medicare.
Main outcomes and measures: Comparative analysis of 8 quality and efficiency metrics in populations enrolled in a 2-sided risk-model Medicare Advantage program and 5% FFS Medicare.
Results: In this analytic cohort of 316 312 individuals (158 156 in each group), 46.11% were men and 53.89% were women; 32.72% were aged 65-69 years, 29.44% were aged 70-74 years, 19.05% were aged 75-79 years, 10.84% were aged 80-85 years, and 7.95% were 85 years or older. The Medicare Advantage model was associated with care of higher quality and efficiency in all 8 metrics compared with the FFS model. This included lower odds of inpatient admission (-18%; odds ratio [OR], 0.82 [95% CI, 0.79-0.84]), inpatient admission through the emergency department (ED) (-6%; OR, 0.94 [95% CI, 0.91-0.97]), ED visits (-11%; OR, 0.89 [95% CI, 0.86-0.91]), avoidable ED visits (-14%; OR, 0.86 [95% CI, 0.82-0.89]), 30-day inpatient readmission (-9%; rate ratio, 0.91 [95% CI, 0.86-0.98]), admission for stroke or myocardial infarction (-10%; OR, 0.90 [95% CI, 0.83-0.98]), and hospitalization for chronic obstructive pulmonary disease or asthma exacerbation (-44%; OR, 0.56 [95% CI, 0.50-0.62]).
Conclusions and relevance: The improvements observed in this study may be partly or fully attributed to the Medicare Advantage model. The Medicare Advantage risk adjustment system appears to be meeting its intended goal by aligning the capitation payments to the health care burden of the individual beneficiary and aggregate population served, thus providing revenue to develop infrastructure that supports improvements in quality and efficiency for the patients enrolled in Medicare Advantage models with 2-sided risk.