Medicare Advantage sees fewer avoidable hospitalizations than original Medicare

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Medicare Advantage had fewer avoidable hospitalizations for ambulatory care−sensitive conditions (ACSCs) when compared to traditional Medicare, but were more likely to have observation stays and emergency department direct discharges for the same conditions, according to findings published in the Journal of the American Medical Association.

These findings raise the possibility of a "shifting effect," authors said, whereby Medicare Advantage patients are more likely than traditional Medicare patients to be treated under observation status or in the ED instead of being admitted to the hospital.

Combining the number of hospitalizations, observation stays and ED direct discharges, Medicare Advantage patients were more likely to have any acute episode of care for ACSCs than were traditional Medicare patients. 

Taken together, these observations suggest that apparent differences in potentially avoidable hospitalizations among MA plans may be explained by shifting inpatient care to other settings, such as ED direct discharges and observation stays.

Given that Medicare Advantage is known to use prior authorizations and "aggressive" case management, authors suggested these plans may perform better with potentially avoidable hospitalization measures not because of higher quality outpatient ambulatory care, but instead owing to shifting patients toward observation status or ED direct discharges. In some cases, site shifting may be appropriate, whereas in others, it may be inappropriate; how it affects care quality is unclear.

Moreover, certain types of Medicare Advantage plans (such as HMOs) may be more likely to engage in this behavior than other types (PPOs, for instance).

Medicare Advantage covered 42% of the Medicare population in 2021, and enrollment is expected to continue growing, data showed.

WHAT'S THE IMPACT

There are a few potential explanations for the findings. For one, MA has strong incentives, inherent in capitation payments, to prioritize cost efficiency in care delivery. This may underlie these differences, considering that admissions are generally more costly than ED direct discharges or observation stays.

Because of that, MA plans may be more aggressive and effective than traditional Medicare in using tools, such as prior authorizations, to ensure that patients are treated by the lowest cost site of care allowed.

Site shifting, meanwhile, may explain why Medicare Advantage had fewer admissions for acute ACSCs such as pneumonia or UTI, but not for chronic ACSCs such as heart failure complications. Clinicians may characterize the former as more feasible to treat across settings than the latter.

Authors also point out that MA plans may further influence utilization by affecting patient choices through more narrow clinician networks and decision-making (i.e., payment incentives to promote efficiency), whereas traditional Medicare is less likely to use these levers.

THE LARGER TREND

On Feb. 1, the Centers for Medicare and Medicaid Services released the 2024 Advance Notice for the Medicare Advantage and Part D Prescription Drug Programs, in which CMS said MA plans are expected to receive a 1.03% increase in revenue.

However, three changes in the rate notice would, on average, cut MA rates in 2024 by 2.27%, AHIP President and CEO Matt Eyles said in a statement last week.

These three changes include: a 3.12% reduction, due to the MA risk model that accounts for the health status and demographic characteristics of enrollees; 1.24% lower quality bonus payments under the Medicare Star Ratings program; and increase benchmarks used to set maximum payment rates on average by 2.09%, which is less than half the growth rate in 2023 (4.88%) and well below the projected growth in per-enrollee Medicare costs (5%).

Eyles was responding to a Department of Health and Human Services statement called "Fact v. Fiction: Biden-Harris Administration is Strengthening Medicare; Private Industry Must Share Obligation to Deliver Quality Health Care for America's Seniors."

Twitter: @JELagasse
Email the writer: Jeff.Lagasse@himssmedia.com