UnitedHealth: MA plan holders save nearly 40% more compared to fee-for-service Medicare beneficiaries

Medicare Advantage (MA) plan holders spent nearly 40% less than their counterparts in Medicare’s fee-for-service program, according to a new analysis from UnitedHealth Group.

The analysis, released Tuesday, comes as insurers are making major expansions into MA, which enables Medicare beneficiaries to use their benefit to purchase a private plan. UnitedHealth aims to add 700,000 members to its MA plans this year, the company said during its recent earnings call.

UnitedHealth’s analysis, which was conducted by consulting firm Milliman, found that the average annual healthcare costs for a 72-year-old MA beneficiary were $3,632 and $5,960 for beneficiaries on fee-for-service.

“Over their lifetime, seniors enrolled in Medicare Advantage can save $50,000 to $85,000,” UnitedHealth said in a release.

RELATED: Medicare Advantage rebates to hit new highs in 2020

The analysis also found that a typical MA beneficiary who also has Part D prescription drug coverage spends $1,477 less than beneficiaries on fee-for-service with Part D coverage.

UnitedHealth found that the estimated total costs for a 65-year-old on Medicare over a 21-year period will be $214,992 on fee-for-service and $128,689 on Medicare Advantage. The analysis was based on average healthcare utilization among Medicare-eligible beneficiaries. 

The cost savings are due in part to the supplemental benefits MA plan holders provide to beneficiaries, including dental, vision and hearing, for no additional premium costs.

RELATED: CMS planning to further grow its use of encounter data in MA risk adjustment

Another reason is greater care coordination to lower unnecessary hospital and emergency department visits, the analysis said.

Milliman's analysis includes data from the Centers for Medicare & Medicaid Services (CMS) on 2019 MA plan benefit design and premiums. The analysis also culled from Milliman's 2017 Part D consolidated database.  

The findings come as more plans aim to adopt supplemental benefits that target social determinants of health such as food stability. CMS finalized a plan last year to expand MA supplemental benefits that target social determinants of health.