Less Intense Postacute Care, Better Outcomes For Enrollees In Medicare Advantage Than Those In Fee-For-Service

Abstract

Traditional fee-for-service (FFS) Medicare's prospective payment systems for postacute care provide little incentive to coordinate care or control costs. In contrast, Medicare Advantage plans pay for postacute care out of monthly capitated payments and thus have stronger incentives to use it efficiently. We compared the use of postacute care in skilled nursing and inpatient rehabilitation facilities by enrollees in Medicare Advantage and FFS Medicare after hospital discharge for three high-volume conditions: lower extremity joint replacement, stroke, and heart failure. After accounting for differences in patient characteristics at discharge, we found lower intensity of postacute care for Medicare Advantage patients compared to FFS Medicare patients discharged from the same hospital, across all three conditions. Medicare Advantage patients also exhibited better outcomes than their FFS Medicare counterparts, including lower rates of hospital readmission and higher rates of return to the community. These findings suggest that payment reforms such as bundling in FFS Medicare may reduce the intensity of postacute care without adversely affecting patient health.

Keywords: Cost of Health Care; Managed Care - Medicare < Managed Care; Medicare.

Exhibit 3

Estimated savings in spending per episode of postacute care if fee-for-service (FFS) Medicare patients used Medicare Advantage levels of postdischarge care Source/Notes: SOURCE Authors’ analysis of hospital discharges for the period January 2011–June 2013 from the Medicare Master Beneficiary Summary File, Provider Analysis and Review File, Minimum Data Set, and the Inpatient Rehabilitation Facility Patient Assessment Instrument. NOTES The savings are for per ninety-day postdischarge episode, using hospital-specific FFS Medicare payment rates (per day for skilled nursing facility and per episode for inpatient rehabilitation and hospital readmission). “Joint replacement” is lower extremity joint replacement.