Study Shows Surprising Readmission Rates for Medicare Advantage

When the predecessor to Medicare Advantage – Medicare+Choice – was introduced back in 1997, the idea was to create additional benefits that would give Medicare recipients access to services they would otherwise pay for out-of-pocket. The thinking was that these new benefits would result in a higher quality of care which would ultimately save money by preventing things like hospital readmissions.

It turns out that Medicare Advantage (MA) may be no better than traditional Medicare in this regard. Recent data published in the Annals of Internal Medicine show that the difference in readmission rates between the two programs is less than one percentage point. In other words, statistically zero.

This probably does not make a difference to Medicare recipients inasmuch as the continued existence of MA doesn't affect their healthcare coverage all that much. But it does make a difference to both insurance providers and hospitals.

 

More About the Study

The research in question involves the study of hospital readmission rates done by researchers from Brown University. They looked at both MA and traditional Medicare readmission rates from 2011 through 2014 using multiple data sets including MedPAR and HEDIS.

Researchers focused mainly on 30-day readmission rates in light of the fact that hospitals with excessively high 30-day rates are 'encouraged' to bring them down through lower Medicare reimbursements. In other words, Medicare pays hospitals less for their services the higher their readmission rates go.

It turns out that the 30-day readmission rates for MA patients is about 17.2%. The rate is 16.9% for traditional Medicare. Even though traditional Medicare fared slightly better, the difference is negligible. It is also clear from the data that the original intent of MA has failed to materialize.

 

More About MA

If there is anything to be concerned about in terms of the study, it is found in how MA is provided. Where traditional Medicare is offered directly through government coffers and regulators, MA is provided by private insurance companies as Medicare Part C coverage. Medicare recipients shop around for their MA policies to get the kind of coverage they want at a price they can hopefully afford.

The problem here is that MA doesn't seem to be helping the government achieve its goal of reducing readmission rates. That means regulators are tasked with promoting a government-backed insurance program that offers consumers no real benefit above and beyond slightly reducing some of their out-of-pocket costs.

Furthermore, neither traditional Medicare nor MA cover all of a consumer's needs. There are at least a dozen items that are not fully covered under either option. Some are not covered even partially. Long-term care in an assisting living facility is one big and glaring example.

 

Employers Are Powerless

Unfortunately for America's employers, they are powerless to help workers in regard to Medicare and MA. Workers contribute to their future Medicare expenses through FICA withholding, but Medicare is a government program administered by government bureaucrats. FICA withholding does not guarantee workers will have adequate health insurance in retirement.

The best employers can do is encourage workers to participate in some sort of long-term financial planning exercise. Working with a financial planner is a consumer's best hope of shoring up his/her finances so that medical bills do not devastate his/her finances during retirement.

As for Medicare and MA, they are barely keeping pace with demand. Neither program has produced the kind of results lawmakers promised from the beginning and continue to promise today. Medicare is a broken system that needs a complete overhaul. In the meantime, hospital readmission rates among both programs remain about the same.

 

Sources:

 

Annals of Internal Medicine – https://annals.org/aim/article-abstract/2736919/hospital-readmission-rat...