Medicare Advantage and Traditional Medicare Hospitalization Intensity and Readmissions

Medicare Advantage plans have incentives and tools to optimize patient care. Therefore, Medicare Advantage hospitalizations may have lower cost and higher quality than similar traditional Medicare hospitalizations. We applied a coarsened matching approach to 2013 Healthcare Cost and Utilization Project hospital discharge data from 22 states to compare hospital cost, length of stay, and readmissions for Traditional Medicare and Medicare Advantage. We found that Medicare Advantage hospitalizations were substantially less expensive and shorter for mental health stays but costlier and longer for injury and surgical stays. We found little difference in the cost and length of medical stays and in readmission rates. One explanation is that Medicare Advantage plans use outpatient settings for many patients with behavioral health conditions and for injury and surgical patients with less complex health needs. Alternatively, the observed differences in behavioral health cost and length of stay may represent skimping on appropriate care.