Changes in Health Care Utilization and Low-Value Service Use After Risk-Based Contract Adoption in Medicare Advantage

Although risk-based payment contracts to health care organizations can reduce health care utilization, there is limited evidence on how these contracts influence the value of health care services delivered, whether effects depend on contract design features, and what these contracts achieve in Medicare Advantage, the segment of US health insurance with the most adoption of risk-based contracts.

To assess whether voluntary transition to risk-based contracts (either upside-only, with financial bonuses possible, or 2-sided with both bonuses and penalties possible) was associated with changes in either broad domains of health care utilization or use of low-value services.

This retrospective cohort study analyzed claims from January 1, 2015, through December 31, 2021, for beneficiaries enrolled in health maintenance organization plans from Humana, a large, national Medicare Advantage insurer. A difference-in-differences analysis measured changes in outcomes for health care organizations that newly transitioned to upside-only or 2-sided risk contracts compared with organizations with stable fee-for-service (FFS) or upside-only risk contracts, respectively. Statistical analysis was conducted between April 4 and June 23, 2025.

Nine utilization measures in 3 domains (inpatient encounters, outpatient visits, testing) and 26 measures of low-value service use in 6 domains (cancer screening, diagnostic and preventive testing, preoperative testing, imaging, cardiovascular testing and procedures, and other surgeries).

The sample included 658 organizations transitioning from FFS to upside-only risk contracts (1 042 272 beneficiary-years), 114 organizations transitioning from upside-only to 2-sided risk contracts (706 303 beneficiary-years), and 3385 control organizations (2 491 985 beneficiary-years). In difference-in-differences analyses, transitioning to upside-only risk contracts was associated with differential reductions in 4 of 9 utilization outcomes (emergency department visits, primary care visits, advanced imaging, and cardiovascular stress testing); however, when analyses accounted for differential temporal trends in outcomes prior to contract transitions, differential reductions were only detected for emergency department visits (-8.4% of baseline use; 95% CI, -15.5% to -1.3%; P = .02) and cardiovascular stress testing (-12.1%; 95% CI -23.4% to -0.7% P = .04). Transitioning to 2-sided risk contracts was associated with differential reductions in specialty visits and advanced imaging; however, neither association was detected after accounting for pretransition outcome trends. Neither type of contract adoption was associated with differential changes in total use of low-value services or differential reductions in any domain of low-value service use.

This study found that voluntary transition to upside-only or 2-sided risk payment contracts in Medicare Advantage was not associated with consistent changes in health care utilization or low-value service use. It is uncertain what factors account for the lack of apparent changes.