Skip to main content

Two-sided risk Medicare Advantage vs. fee-for-service Medicare programs

How fully accountable care improves quality outcomes.

A comparison across eight key quality metrics 

Many studies have compared fee-for-service Medicare to Medicare Advantage. But, within Medicare Advantage, most clinicians are still being paid using fee-for-service models.

Kenneth Cohen, MD, Executive Director of Translational Research with Optum Care, says only two known studies had previously looked at a Medicare Advantage subset where physicians were taking two-sided risk — accepting full responsibility for outcomes and total cost of care.

“Both studies showed improved outcomes. Specifically, reduced mortality and fewer unnecessary emergency department visits — among the groups taking two-sided risk,” Dr. Cohen says. “So, we set out to compare the Optum Health Medicare Advantage population to the fee-for-service Medicare population.”  

Dr. Cohen and the team pre-specified eight metrics and studied how they compared in two-sided risk Medicare Advantage versus fee-for-service Medicare models. Metrics included:

  • Hospital admission 
  • Admission to hospital through the emergency department 
  • Readmission to hospital within 30 days
  • Emergency department visit 
  • Avoidable emergency department treat-and-release 
  • Emergency department return visit within 30 days 
  • Inpatient stroke or heart event 
  • Chronic obstructive pulmonary disease (COPD) exacerbation resulting in hospital admission

The team then used the OptumLabs data warehouse to review the Medicare Advantage population and pulled a 5% sample of fee-for service Medicare patients. For analysis, they developed two groups of ~ 160,000 patients each, matched closely according to age, sex and location.

Results

Across all eight metrics, Dr. Cohen and the team saw clinically meaningful differences. They were all in favor of two-sided risk Medicare Advantage.

“The concept of a fully accountable delegated physician organization is fundamental to the future success of our health care system,” Dr. Cohen says. “Right now, about 85% of physicians are exclusively in fee-for-service arrangements, some with the potential for an upside-only bonus.

“There are emerging data points that show when a physician organization takes full risk for quality and total cost of care, patient outcomes improve.” 

Additional metrics could expand study 

Dr. Cohen says this study was quite granular, but researchers could replicate the design to focus on major areas of clinical care, like diabetes, COPD and heart failure. 

“We can do much more,” Dr. Cohen says. “Future studies could bring in additional quality metrics, like cancer screening, immunization rates and patient-reported outcomes. We fully intend to broaden the scope of the study and replicate it by looking at a wide swath of clinically important areas going forward.” 

Abbreviations: COPD, chronic obstructive pulmonary disease; ED, emergency departments; FFS, fee-for-service; IP, inpatient; MA, Medicare Advantage; MI, myocardial infarction; NA,not applicable; SMD, standardize mean difference.

a Unless otherwise indicated, data are expressed as No. (%) of patients.
b Calculated using the X2 test

Eliminating low-value care

“About one-third of the care delivered in the United States is either wasted or harmful. It doesn’t improve health outcomes or quality of life,” Dr. Cohen says. “Yet, there is ongoing utilization of that one-third of care, frankly, because we pay the same for low-value care that we do for high-value care.

“When physicians accept responsibility for total cost of care, one of the first things they do is get rid of low-value care because it doesn’t help patients and drives up costs.”

Groups were matched exactly on age group, sex, and state and adjusted for baseline inpatient (IP) and emergency department (ED) visits after matching. COPD indicates chronic obstructive pulmonary disease; MI, myocardial infarction; OR, odd ratio; and RR, rate ratio.

Achieving the Quadruple Aim 

  • Patient satisfaction: In a fully accountable model, patients recognize and benefit from a high-level of care coordination.
  • Clinician well-being: Clinicians want to do what’s right for their patients. With easy-to-use evidence-based platforms, they can experience significant improvement in the quality of care they practice. 
  • High-quality outcomes: The care coordination required within a two-sided risk Medicare Advantage model leads to improved outcomes across multiple quality measures. 
  • Affordable health care: Removing wasteful and harmful care improves overall affordability.

Cohen, Kenneth, et al. “Comparison of care quality metrics in 2-sided risk Medicare Advantage vs. fee-for-service Medicare programs.” Journal of the American Medical Association, Dec. 12, 2022. jamanetwork.com/journals/jamanetworkopen/fullarticle/2799376