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Medicare Advantage Has 'Spillover' Effects on Postacute Care Among Those Who Stick With Traditional Medicare


A study in this month's Health Affairs shows that Medicare Advantage penetration has a ripple effect on the patterns of postacute care usage among those in traditional Medicare. As Medicare Advantage penetration increased, use of postacute care services by beneficiaries in traditional Medicare decreased.

Research has shown that beneficiaries in Medicare Advantage plans tend to use fewer postacute care services, particularly those delivered in institutional settings such as nursing homes, than beneficiaries in traditional Medicare. The plans use prior authorization and other managed care strategies to limit access to the institutional care and steer patient toward care that is less expensive. How the decrease affects patients is perhaps debatable, but by some accounts the outcomes are similar if not better. Lower cost. Similar if not better outcomes. That’s high-value care.

It is obvious that Medicare Advantage would have direct effects on postacute services of people enrolled in the plans. It is a little less so that the plans would also influence postacute care among beneficiaries who stick with traditional Medicare. But the “spill over” effects of Medicare Advantage are well documented, especially in areas and regions where the proportion of beneficiaries in the plans is high.

In a study published in this month’s issue of Health Affairs, a team of Harvard and Brown Universities looked at the spillover effect of Medicare Advantage on postacute care for congestive heart failure, hip fracture and stroke, three conditions that commonly require postacute care. They also looked at share of traditional Medicare beneficiaries attributed to accountable care organizations (ACOs) and how that might affect the postacute care spillover. As they explain, if more beneficiaries are in ACOs, that might mean less of a spillover effect from Medicare Advantage because their care is already being managed.

The researchers, led by Fangli Geng, Ph.D., candidate in health policy at Harvard, used data from 2013-2017 from the Medicare Beneficiary Summary Fire and the Medicare Provider Analysis and Review inpatient claims. Postacute care was defined as care delivered by a home health service, a skilled nursing facility, an inpatient rehabilitation facility or a long-term care hospital. They grouped healthcare markets into six levels of Medicare Advantage “penetration”: less than 10% of beneficiaries in a market enrolled in Medicare Advantage plan, 10% to less than 20%, and so on.

They found, not surprisingly, that Medicare Advantage does have spillover effects on the use of postacute services by people in traditional Medicare. More specifically, they found that a 10-percentage-point increase in Medicare Advantage was associated with less use of any postacute care service. They saw the association for congestive heart failure, hip fracture and stroke but it was not statistically significant for hip fracture.

They also found that there was an association between Medicare Advantage penetration and spending on postacute care for beneficiaries in traditional Medicare but with the proviso that that numbers did not meet the thresholds traditionally used to establish significance.

They did not any evidence that less use of postacute services by traditional beneficiaries in markets with high Medicare Advantage penetration had worse short-term outcomes, as measured by 30-day rehospitalization and mortality,

Their findings suggest that ACOs may accentuate rather than dampen the Medicare Advantage spillover effect. In markets with both high ACO and Medicare Advantage penetration, use of the postacute care services among the traditional Medicare beneficiaries was even lower.

Geng and his colleagues =say that one policy implication of their research is to cast the alleged overpayment to Medicare Advantage plans in a slightly different slight. The spillover effect of Medicare Advantage may offset, to some extent, the overpayment to the plans if the result is less use of postacute services by people in the traditional Medicare. They also note that the research suggests that the financial benchmarks used to decide the shared savings payments to ACOs should perhaps be adjusted to take into account Medicare Advantage penetration.

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