Research at a Glance: Demographic Characteristics of Chronically Ill Medicare Advantage Beneficiaries Relative to Traditional Fee-For-Service Medicare

Neeka Nazari, BMA Policy Intern

It’s critical for policymakers to have demographic information on Medicare utilization, cost, and outcomes, given that the majority of Medicare spending is on beneficiaries with multiple chronic conditions. Last week Avalere released a new report comparing Medicare Advantage and Traditional Fee-for-Service (FFS) Medicare that begins to offer answers to the question of how best to meet the health needs of the high number of Medicare beneficiaries with chronic conditions. Specifically, the report analyzed the performance and outcomes of Medicare Advantage relative to FFS Medicare beneficiaries with three of the most prevalent chronic conditions: diabetes, hyperlipidemia, and hypertension. The study found Medicare Advantage has a higher proportion of patients with clinical and social risk factors, yet, despite this fact, Medicare Advantage beneficiaries with chronic conditions experienced lower utilization of high-cost services and better outcomes than FFS Medicare beneficiaries.

Within the study population of Medicare beneficiaries with diabetes, hyperlipidemia, or hypertension, Medicare Advantage cared for a higher number of clinically complex patients with social risk factors. Twice as many beneficiaries were racial and ethnic minorities, 63% more beneficiaries were originally enrolled in Medicare due to disability, and 15% more beneficiaries were dually eligible/low-income. Yet, Medicare Advantage outperformed FFS Medicare with higher rates of preventive screenings, fewer avoidable hospitalizations, and fewer emergency room visits.

These findings demonstrate that Medicare Advantage effectively manages high-need beneficiaries, undermining assertions that Medicare Advantage patients tend to be healthier. In fact, over 75% of beneficiaries in the study population had all three chronic conditions known to drive significant spending in Medicare. The findings support the hypothesis that a key reason for the lower costs and higher outcomes for high-need individuals is the care management that differentiates Medicare Advantage from FFS Medicare.

According to MedPAC, FFS Medicare lacks care coordination due to inadequate financial incentives to avoid duplicative services and challenges coordinating across care settings. Fragmentation burdens patients and providers, with the average primary care physician interacting with 229 physicians at 117 different practices for Medicare patients. Research has shown the financial framework of risk based, capitated payments under Medicare Advantage improves care management to better meet patients’ needs. An integrated system provides more coordinated care for beneficiaries. The Avalere study found high-need, chronically ill beneficiaries in Medicare Advantage receive more preventive services that may help anticipate and manage chronic conditions and avoid preventable complications.

The study population of Medicare Advantage beneficiaries have multiple chronic conditions, with more clinical and social risk factors than FFS Medicare beneficiaries. In addition to care management, the financial structure and flexibility of the Medicare Advantage program provides better outcomes at a lower cost. The Avalere research refutes assertions that Medicare Advantage beneficiaries tend to be healthier and corroborates research on the importance of care management to achieve better outcomes, particularly for high-need beneficiaries.

In our last blog the key findings from the Avalere research were outlined. In the next blog of this series, findings from the Avalere report on utilization and outcomes for Medicare Advantage relative to FFS Medicare beneficiaries will be discussed in greater detail.

To better understand how Congress and the Administration can act to protect and strengthen Medicare Advantage, please visit the Better Medicare Alliance policy resource library and sign up for our policy alerts.