More seniors are picking MA plans, where the federal government pays private insurers to manage beneficiaries’ care. As of January 2023, MA covered half of eligible Medicare beneficiaries.

Watchdogs have aired concerns as MA spending has ballooned over the past decade, due to growth in MA plans and higher per-person spending in MA than in traditional Medicare.

MA overpayments could reach more than $75 billion this year and threaten the financial health of the Medicare program, according to a recent study by the USC Schaeffer Center for Health Policy and Economics.

That analysis found MA plans were overpaid by 20% due to the favorable selection of beneficiaries, more aggressive coding and quality bonuses. The Medicare Payment Advisory Commission, which advises Congress on Medicare policy, argued it may be time to unlink MA benchmarks from FFS spending data.

However, industry-backed studies have found better outcomes for MA plan beneficiaries, including a 2018 Avalere analysis also funded by the BMA that examined utilization for the same chronic conditions.

The latest study, which relies on administrative and claims data from 2019, suggests that MA spending for beneficiaries with the three chronic conditions analyzed is lower than spending in traditional Medicare.

The study also found emergency room visits were also lower among MA beneficiaries, ranging from 442 to 511 visits per 1,000 beneficiaries, compared with 573 to 665 visits in FFS.

Physician office visits were also higher for MA enrollees, with 11 to 12 visits per year compared with 10.1 to 10.5 for FFS beneficiaries.

“There are a lot of potential explanations for this, one possibly being care coordination in MA and use of different care management techniques. Fee-for-service does have care coordination in terms of some of the ACOs and value-based care demonstrations that come out of [CMS’ innovation center]. But it’s more standard across MA plans perhaps,” Gillen said.

Though rates of inpatient utilization were lower for MA enrollees, length of stay tended to be longer. Quality as determined by HEDIS measures was similar for MA and FFS beneficiaries.

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