title: Value-based contracting innovated Medicare advantage healthcare delivery and improved survival.
abstract: OBJECTIVE
  In Medicare Advantage (MA) with its CMS Hierarchical Condition Categories (CMS-HCC) payment model, CMS reimburses private plans (Medicare Advantage Organizations [MAOs]) with prospective, monthly, health-based or risk-adjusted, capitated payments. The effect of this payment methodology on healthcare delivery remains debatable. How value-based contracting generates cost efficiencies and improves clinical outcomes in MA is studied.
  
  
  METHODS
  A difference in contracting arrangements between an MAO and 2 provider groups facilitated an intervention-control, preintervention-postintervention, difference-in-differences approach among statistically similar, elderly, community-dwelling MA enrollees within one metropolitan statistical area.
  
  
  METHODS
  Starting in 2009, for intervention-group MA enrollees, the MAO and a provider group agreed to full-risk capitation combined with a revenue gainshare. The gainshare was based on increases in the Risk Adjustment Factor (RAF), which modified the CMS-HCC payments. For the control group, the MAO continued to reimburse another provider group through fee-for-service. RAF, utilization, and survival were followed until December 31, 2012.
  
  
  RESULTS
  The intervention group's mean RAF increased significantly (P <.001), estimating $2,519,544 per 1000 members of additional revenue. The intervention increased office-based visits (P <.001). Emergency department visits (P <.001) and inpatient hospital admissions (P = .002) decreased. This change in utilization saved $2,071,293 per 1000 enrollees. By intensifying office-based care for these MA enrollees with multiple comorbidities, a 6% survival benefit with a 32.8% lower hazard of death (P <.001) was achieved.
  
  
  CONCLUSIONS
  Value-based contracting can drive utilization patterns and improve clinical outcomes among chronically ill, elderly MA members.
authors.affiliation: Optum, Mail Code CA152-0243, 3110 W Lake Center Dr, Santa Ana, CA 92704-6917. E-mail: aloke.mandal@optum.com.
authors.forename: Aloke K
authors.initials: AK
authors.lastname: Mandal
authors.forename: Gene K
authors.initials: GK
authors.lastname: Tagomori
authors.forename: Randell V
authors.initials: RV
authors.lastname: Felix
authors.forename: Scott C
authors.initials: SC
authors.lastname: Howell
mesh_terms: D000368:Aged; D014487:Centers for Medicare and Medicaid Services, U.S.; D015897:Comorbidity; D003362:Cost-Benefit Analysis; D018588:Fee-for-Service Plans / Q000191:economics; D005102:Health Expenditures; D006801:Humans; D020398:Medicare Part C / Q000191:economics*; D020379:Risk Adjustment / Q000379:methods; D016019:Survival Analysis; D014481:United States; D062505:Value-Based Purchasing