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Managing care and competition
Date:12/4/2012

Medicare Advantage (MA), with more than 10 million enrollees, is the largest alternative to traditional Medicare. MA's managed care approach was designed to provide coordinated, integrated care for patients and savings for taxpayers, but since the program launched as Medicare Part C in 1985, critics have said that the system limited enrollee freedom of choice without significant benefit or savings to the Medicare program. They also pointed to the tendency of some private payers to design benefit plans and marketing campaigns that attracted healthier patients, leaving sicker, moreexpensive patients in traditional Medicare a process known as favorable selection.

Three new studies led by researchers from Harvard Medical School's Department of Health Care Policy address these issues. The first shows that enrollees in MA use health care services more efficiently and cost effectively. The second and third studies show that a series of risk-adjustment reforms that began in 2004 have mitigated the adverse affects of favorable selection. All three papers appear in the December issue of Health Affairs.

Bruce Landon, HMS professorof health care policy and co-authors compared the service utilization patterns of MA HMO enrollees with traditional Medicare enrollees from 2003-2009. The authors found 25 to 35 percent lower emergency room use and 20 to 25 percent lower inpatient medical days among the MA HMO patients. Elective knee and hip replacement use was 10 to 20 percent lower. In contrast, MA patients had open-heart surgery at consistently higher rates in accordance with current practice guidelines. These heart surgeries are more expensive than other treatments, but provide more durable repairs and therefore may represent a better value in the long term.

"Integrated care provided by managed care plans, with their ability to put in policies and procedures to control utilization appear to be having desired effects," Landon said, adding that
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Contact: David Cameron
david_cameron@hms.harvard.edu
617-432-0441
Harvard Medical School
Source:Eurekalert

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