title: Medicare Advantage Plans Pay Hospitals Less Than Traditional Medicare Pays.
abstract: There is ongoing debate about how prices paid to providers by Medicare Advantage plans compare to prices paid by fee-for-service Medicare. We used data from Medicare and the Health Care Cost Institute to identify the prices paid for hospital services by fee-for-service (FFS) Medicare, Medicare Advantage plans, and commercial insurers in 2009 and 2012. We calculated the average price per admission, and its trend over time, in each of the three types of insurance for fixed baskets of hospital admissions across metropolitan areas. After accounting for differences in hospital networks, geographic areas, and case-mix between Medicare Advantage and FFS Medicare, we found that Medicare Advantage plans paid 5.6 percent less for hospital services than FFS Medicare did. Without taking into account the narrower networks of Medicare Advantage, the program paid 8.0 percent less than FFS Medicare. We also found that the rates paid by commercial plans were much higher than those of either Medicare Advantage or FFS Medicare, and growing. At least some of this difference comes from the much higher prices that commercial plans pay for profitable service lines.
authors: Laurence C. Baker is a professor of health research and policy at Stanford University, in California, and a research associate at the National Bureau of Economic Research, in Cambridge, Massachusetts.
authors: Laurence C
authors: LC
authors: Baker
authors: M. Kate Bundorf is a professor of health research and policy at Stanford University and a faculty research fellow at the National Bureau of Economic Research.
authors: M Kate
authors: MK
authors: Bundorf
authors: Aileen M. Devlin is a research fellow at the Stanford Law School.
authors: Aileen M
authors: AM
authors: Devlin
authors: Daniel P. Kessler (fkessler@stanford.edu) is a professor in the Law School and the Graduate School of Business, a professor (by courtesy) in the Department of Health Research and Policy, and a senior fellow at the Hoover Institution, all at Stanford University. He is also a research associate at the National Bureau of Economic Research.
authors: Daniel P
authors: DP
authors: Kessler
mesh_terms: D000368:Aged; D000369:Aged, 80 and over; D017046:Cost Savings; D003953:Diagnosis-Related Groups / Q000458:organization & administration; D018588:Fee-for-Service Plans / Q000191:economics*; D005260:Female; D005102:Health Expenditures; D006760:Hospitalization / Q000191:economics*; D006801:Humans; D007349:Insurance, Health, Reimbursement / Q000191:economics*; D008297:Male; D006278:Medicare / Q000191:economics; D020398:Medicare Part C / Q000191:economics*; D014481:United States
keywords: Health Economics; Hospitals; Medicare