According to a new study by Professor Jeah Jung, Medicare Advantage generally used fewer resources (and therefore cost less), but to varying extents across conditions, including in some cases where it was not significantly different from traditional Medicare.
More than 18 percent of the U.S. population ($65 million) is enrolled in Medicare, the federal insurance program for the elderly and some people with disabilities. Eligible individuals have two options for receiving benefits: (1) traditional Medicare or (2) Medicare Advantage (MA) where care is offered by private insurance companies approved by Medicare. MA has grown significantly in recent years and now covers half of the Medicare population. Given the rapid growth of MA, the quality and cost of care, relative to traditional Medicare, has become an important policy issue.
Medicare Advantage used fewer resources than traditional Medicare for many, but not all, conditions, according to a new study led by Jeah Jung, a professor of public health at George Mason University. Examples of resource utilization studied include inpatient hospital services, outpatient and professional services, hospice care, and Medicare Part D drugs. The study found that inpatient hospital services are one of the main sources of explanation for the difference in total resource use between the two types of Medicare. Although not part of the study, in many cases, lower resource use results in a lower bill for Medicare and for the patient.
A large body of literature has suggested that resource utilization is lower in Medicare Advantage than in traditional Medicare, but no study to date has examined differences in resource utilization between the two options by condition, a said Jung, the lead researcher. As MA enrollment increases, efforts are needed to identify the mechanisms underlying differences in resource utilization between MA and traditional Medicate and assess their implications for patient care.
The findings suggest that Medicare Advantage may use fewer resources for conditions in which appropriate care management can help avoid hospitalizations, such as rheumatoid arthritis and diabetes. The results also suggest that resource use may be similar between the two types of Medicare for conditions in which hospitalizations cannot be avoided, such as stroke, cancer, and pneumonia.
A wide variation in resource utilization differences observed across conditions between Medicare Advantage and Traditional Medicare was published in Health Affairs in September 2023. Caroline S. Carlin and Roger Feldman of the University of Minnesota and Ge Song, a doctoral student at the George Mason University, are co-authors on the paper.
Researchers analyzed nationwide medical claims and encounter records from the Medicare population for 33 conditions. MA resource use was significantly lower for 23 conditions. Researchers measured resource use for the following service categories: inpatient hospital services, outpatient facility services and professional services, hospice care, and Part D drugs.
This study was supported by the National Institute on Aging, National Institutes of Health (Grant No. 1R01AG069352-01).
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