Medicare Advantage patients account for fewer avoidable hospitalizations. Here's why

A new study found that Medicare Advantage (MA) had fewer avoidable hospitalizations for acute conditions compared to traditional Medicare, a trend that may be caused by shifting patients to other sites of care. 

The study, published in the Journal of the American Medical Association (JAMA) late last week, compared hospitalization rates between Medicare fee-for-service and MA. The study found MA had fewer avoidable hospitalizations than traditional Medicare, which may have been due to patient shifts such as emergency direct discharges and observation stays. 

“What that suggests is that the difference between these ambulatory care conditions may be explained by shifting where those acute episodes of care are being cared from,” said Adam Beckman, the lead study author, in an interview with Fierce Healthcare. 

Researchers at Harvard University looked at a sample of administrative claims and encounter data for traditional and MA patients in 2018. They assigned a risk score to each patient similar to the method used by the federal government to pay MA plans. 

The study also identified chronic and acute ambulatory care-sensitive conditions. Some of the more acute conditions include urinary tract infections and pneumonia, while chronic conditions include hospitalizations stemming from diabetes and hypertension. 

“These are conditions that experts and physicians have previously said may be avoidable when patients have enough appropriate access to high-quality outpatient ambulatory care,” Beckman said. 

The study showed that MA patients were less likely than those enrolled in traditional Medicare to be admitted to the hospital for acute conditions, but found no significant difference for the more chronic conditions. 

However, MA patients were more likely to experience a direct discharge from the emergency department for both acute and chronic conditions compared with traditional Medicare. 

There was also a higher rate of observation stays—where a patient stays for a longer period of care but is not actually admitted into the hospital—in MA compared to traditional Medicare. 

Beckman said the findings raise several additional questions about the related shift to other sites of care. It remains unclear, for instance, whether MA patients are getting better care from direct discharges or observation stays than if they would be admitted to the hospital. 

“If there are trade-offs where this shifting effect is coinciding with inappropriate or inaccurate care and the patients would have been better off being treated with an admission, then the story gets much more complicated,” Beckman said. 

MA plans can use several cost containment tools such as prior authorization and narrow networks, a key difference compared to traditional Medicare. Researchers believe cost containment could play a role in shifting the patients to other areas. 

“The possibility that site shifting in MA is occurring to promote more cost efficiency is further supported by our study’s finding that HMO plans were more likely than PPO plans to demonstrate the shifting trends; generally, HMOs are more restrictive (e.g., in network size or referral requirements) than PPOs,” the study said. 

Researchers noted that the findings suggest the “need for caution in relying on hospitalizations for [avoidable conditions] to serve as an indicator of higher-quality care in ambulatory settings.”

The findings come amid increased scrutiny on how the federal government pays MA plans. The Centers for Medicare & Medicaid Services released a final rule late last month that overhauled risk adjustment audits for plans to ensure accuracy in payments and a proposed pay rate change that insurers call a cut for 2024 payments.