“Medicare Advantage Spends Less on Care, So Why Is It Costing So Much?,” by Austin Frakt, New York Times

“The Medicare Advantage program was supposed to save taxpayers money by allowing insurers to offer older Americans private alternatives to Medicare. The plans now cover 19 million people, a third of all those who qualify for Medicare. Enrollee satisfaction is generally high, and studies show that plans offer higher quality than traditional Medicare. But the government pays insurers more than they pay out for patient care — in some years, it turns out, a great deal more. . . . One reason for the lower spending is that Medicare Advantage enrollees use less care or use lower-cost care. For example, compared with traditional Medicare patients, Medicare Advantage patients are more likely to go home after a hospital visit, rather than to a skilled nursing facility. Medicare Advantage patients see specialists relatively less often and receive fewer inpatient operations, but more outpatient ones, which are cheaper. All of these are what you’d expect from care management techniques used by Medicare Advantage: referral requirements and narrow networks of doctors, for instance.”

LTC Comment (from Stephen A. Moses, President, Center for Long-Term Care Reform):
Originally, MA plans saved government money automatically, because their reimbursement was based on approximately 95% of an estimate of what traditional Medicare would have paid. However, according to the Kaiser Family Foundation:  “Over the past decades, Medicare payment policy for plans has shifted from one that produced savings to one that focused more on expanding access to private plans and providing extra benefits to Medicare private plan enrollees across the country.”

Medicare Advantage Spends Less on Care, So Why Is It Costing So Much?

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