A Systematic Journal – Health Economist

Medicare Advantage has grown over time. In 2020, almost four in ten (39%) of all Medicare beneficiaries – 24.1 million people out of 62.0 million Medicare beneficiaries in general – have been enrolled in Medicare Advantage (MA) plans.

With growing MA enrollment, a key question is who provides superior quality care: Medicare fee-for-service (FFS) or MA? Who is best able to keep costs under control?

To answer this question, a recent article by Agarwal et al. 2021 conducts a systematic literature review of all studies using data from 2003 or later. The year 2003 was chosen because it was the year that the Medicare Modernization Act was passed. The study excluded Medicare Advantage plans that were limited to Special Needs Plans (SNPs) or those that included only dual beneficiaries. Based on this literature, the authors identified 48 studies and found that:

… Medicare Advantage has been associated with more preventive care visits, fewer hospital admissions and emergency department visits, shorter hospital and longer stays of qualified nursing facilities, and lower health care costs. Medicare Advantage has surpassed traditional Medicare in most studies by comparing quality of care metrics. However, evidence on patient experience, readmission rates, mortality, and racial / ethnic disparities did not show a trend of better benefits in Medicare Advantage.

In short, the literature seems to favor Medicare Advantage (MA).

However, there are some concerns with these results. Healthier people may select Medicare Advantage and it is unclear whether all included studies have been able to adapt to observable and unobservable health differences between the FFS and MA populations. For example, Medicare Advantage plans have an incentive to more fully document patients ’illnesses and comorbidities, since CMS risk regulation payments are tailored to the health weight of patients. However, a systematic review is useful to understand any differences in quality and cost between FFS and MA, particularly as MA enrollment grows over time.

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