Primary Care Physicians In Medicare Advantage Were Less Costly, Provided Similar Quality Versus Regional Average

Area of Science:

• Health Economics
• Healthcare Management
• Public Health Policy

Background:

• Medicare Advantage (MA) plans demonstrate lower service utilization and higher ambulatory care quality compared to traditional Medicare, implying cost efficiencies.
• Selective contracting with healthcare providers is a key strategy employed by MA plans to manage costs and quality.

Purpose of the Study:

• To investigate the impact of selective contracting with primary care physicians (PCPs) on cost and quality within the Medicare Advantage program.
• To assess how PCP costliness and network participation influence MA plan performance.

Main Methods:

• PCP costliness was evaluated by comparing observed costs to predicted costs for their traditional Medicare patients.
• Analysis included assessing the relationship between PCP costliness, MA network inclusion, and patient selection.
• Quality metrics for MA PCPs were compared to regional benchmarks.

Main Results:

• PCPs in MA networks were, on average, $433 less costly per patient than the regional mean, with less costly physicians selected more frequently.
• Favorable patient selection by MA PCPs partially explained these cost savings.
• PCPs excluded from all MA networks were significantly costlier ($1,617 more) and had lower quality.
• Narrower MA networks showed slightly lower quality but were associated with lower PCP costs ($212 less).

Conclusions:

• Selective contracting by Medicare Advantage plans plays a significant role in reducing healthcare costs.
• The exclusion of higher-cost, lower-quality physicians from MA networks contributes to program savings.
• Further research into network design and patient selection dynamics is warranted.