Study: Value-Based Medicare Advantage Plans Deliver Better Care at a Lower Cost

November 27, 2018

 

A new study shows that Humana’s shift from a fee-for-service to a value-based care model for its Medicare Advantage plans is paying off.

The internal study concluded that the shift to focusing on value over volume is responsible for reducing costs for Humana’s Medicare Advantage members and improving the quality of care they receive.

For seniors enrolled in Humana Medicare Advantage plans, medical costs were found to be nearly 16 percent lower for members of value-based plans as opposed to members of fee-for-service models.

Doctor talking with her patient

Value-based care vs. fee-for-service

The fee-for-service model has been a health insurance standard practice for years. In a fee-for-service model, patient bills are unbundled so that each item, test or service they receive is billed separately as an individual charge.

A value-based care model, which is gaining popularity, ties payments to the quality of care given and rewards health care providers for efficiency and effectiveness. Under the value-based model, health care providers can be reimbursed for additional pay if they meet certain quality measures, control costs and improve the health of their patients.

The study published by Humana examined approximately 1.5 million beneficiaries of Humana’s value-based Medicare Advantage plans alongside around 146,000 members of Humana’s traditional fee-for-service plans.

Not only were overall health care costs lower for beneficiaries in Humana value-based plans, but members of value-based care plans also experienced 7 percent fewer visits to the emergency room and 5 percent fewer hospital admissions.

Medicare Advantage plans and the value-based care model

Medicare Advantage plans (Medicare Part C) are an alternative way to receive Original Medicare benefits (Medicare Part A and Part B) under one privately-sold plan. One of the benefits of Medicare Advantage plans is that many plans may offer coverage not offered by Original Medicare.

These extra benefits can include coverage for prescription drugs, dental, vision, hearing and more. According to the Kaiser Family Foundation, there are around 3,700 Medicare Advantage plans available for sale in 2019, up nearly 20 percent from 2018.

When Medicare Advantage plans began to rise in popularity in the mid-2000’s, they generally followed the same fee-for-service model used by Original Medicare. But in recent years, many plans have moved towards a value-based care model.

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