Study: Medicare Advantage surgical episodes cost less, achieve similar quality as traditional Medicare

Editor's Note

Medicare Advantage (MA) patients undergoing elective surgery incurred lower costs than comparable patients in traditional Medicare (TM) without higher readmission rates and with no significant difference in mortality rates, according to a study published August 1 in JAMA Health Forum. The findings suggest that MA plans reduce surgical episode costs through shifts in care settings, facility selection, and post-acute care use.

This retrospective cohort study analyzed 1,177,700 elective procedures performed in 2019 on 1,110,263 Medicare beneficiaries. It compared 30-day episode costs, resource utilization, and outcomes for patients enrolled in MA vs TM across 11 surgical categories. Regression models controlled for surgical type, patient characteristics, comorbidity indexes, and geography. Key findings include the following:

• Average 30-day episode costs were $671 (3.1%) lower for MA patients than for TM patients (95% CI, $639–$702).
• The share of procedures billed at the higher inpatient rate was 5.41 (95% CI, 5.23–5.58 pp), and mean inpatient stay was 0.27 days shorter (95% CI, 0.26–0.29).
• MA patients were 3.82 pp more likely to be discharged home (95% CI, 3.65–3.99 pp).
• Readmission rates were 0.70 pp lower for MA patients (95% CI, −0.83 to −0.58 pp), with no significant difference in 30-day mortality.
• MA patients traveled an average of 2.32 miles farther for surgery (95% CI, 1.62–3.01 miles) compared to TM patients, suggesting selective referral may contribute to cost differences.
• Use of open surgical approaches was 0.52 pp lower for MA patients (95% CI, −0.92 to −0.12 pp).

Researchers attributed cost savings to multiple mechanisms, including a higher share of outpatient surgeries, shorter hospital stays, reduced postacute care, and selective contracting with lower-cost providers. Steering patients to different facilities explained 14% of the cost differential, while care management and procedural choices accounted for additional differences. A separate analysis showed that 46% of savings could be due to selection of lower-cost procedures within categories.

Importantly, the authors found no evidence that these cost reductions came at the expense of quality, as measured by readmission and mortality rates. However, the study could not access actual MA payment data and relied on modeled TM costs to estimate episode spending for MA patients.