Comparing the Cost Effectiveness of Chronic Care between Medicare Advantage and FFS Medicare Beneficiaries

Researchers at the University of Minnesota compared the technical efficiency of care—a measure that links resource inputs with quality outcomes—for chronically ill Medicare Advantage (MA) and fee-for-service (FFS) beneficiaries. MA health plans are viewed by some as providing an opportunity to improve care for beneficiaries with chronic illnesses. Because MA plans do not submit encounter data to CMS, however, it has not been possible to directly address whether MA plans are more efficient than traditional Medicare FFS plans in caring for these beneficiaries. In particular, the researchers: 1) validated that the new HEDIS Relative Resource Use (RRU) measures can be applied to FFS; and 2) compared RRUs in FFS and MA plans within geographic areas. The objective of the project was to provide policymakers with more information about the factors that contribute to efficiency and to identify the relative strengths of MA and FFS for chronically ill beneficiaries.