Resource Use and Quality of Care in Medicare Advantage

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Project Summary Medicare Advantage (MA) is a private alternative to the Traditional Medicare (TM) program. MA has grown substantially in recent years, covering more than one-third of the Medicare population. MA is Medicare’s most important effort to create financial incentives for providers to deliver efficient care. Whether MA delivers care more efficiently than TM has long been an important inquiry. However, the existing work is limited in important ways. Notably, it provides little information on MA’s care provision for patients with serious and complex conditions, whose care relies heavily on specialists (“specialist- heavy conditions”). This is a significant gap because those conditions have serious health outcomes and high costs. In addition, the existing work shows that MA reduces costs by shifting care provision toward services delivered by primary care physicians (PCPs), but the work offers little insight into whether those shifts are a viable option to deliver efficient care for specialist-heavy conditions. This project will provide the first evidence on MA performance for specialist-heavy conditions – key information needed to assess implications of MA growth for patient care. The study will compare resource use and quality of care between MA and TM for five specialist-heavy conditions that have important cost and health impacts: two conditions where MA’s ability to modify the amount of PCP care is limited due to care standardization and three conditions that present opportunities for MA to increase PCP involvement in care compared with TM. The project will examine whether MA performs better than TM when it shifts care provision toward PCP services. It will thus validate whether a channel by which MA improves efficiency in care is viable for specialist-heavy conditions. This is a key to identifying opportunities to improve care delivery for those conditions. The study will address sample selection related to MA enrollment using an instrumental variable (IV) approach – a rigorous method to obtain unbiased estimates.