Home Care Providers Take Note as Medicare Advantage Grows, Creates Savings for Seniors

Compared to fee-for-service Medicare, seniors save close to $2,000 on average in total annual health care spending with Medicare Advantage (MA).

That’s according to a new study — based on 2019 Medicare Current Beneficiary Survey data — from Better Medicare Alliance. The study features an analysis conducted by the Washington, D.C.-based research and consulting firm ATI Advisory. 

Specifically, MA beneficiaries report $1,965 less in total annual out-of-pocket costs and premiums than fee-for-service Medicare beneficiaries.


One way MA offers cost protections to beneficiaries is through cost-share and premium buy-downs, Allison Rizer, principal and business lead of Medicare-Medicaid integration and LTSS at ATI Advisory, told Home Health Care News.

“Medicare Advantage plans have broad latitude to use their rebate dollars on a variety of benefits, and a common approach is to use these dollars on cost protections,” she said. “Other examples of benefits might include in-home supports, social benefits and other supplemental services that can reduce hospitalizations and emergency department utilization. As a result of this improved medical utilization, a person’s out-of-pocket costs go down.”

Between 2018 and 2019, health care spending went up 5% for MA beneficiaries and 9% for fee-for-service Medicare beneficiaries.


The report also found that having a lower average health care spend decreased the total “cost burden,” meaning spending more than 20% of income on health care costs, for MA beneficiaries. About 13% of MA beneficiaries experience cost burden, compared to 20% of fee-for-service Medicare beneficiaries.

This is noteworthy because low-income Medicare beneficiaries are more likely to enroll in MA than higher-income beneficiaries, according to the study.

In 2019, the average total spending among beneficiaries was $3,524 in MA and $5,489 for Medicare.

Additionally, researchers found that MA cost savings were seen when it came to race and ethnicity.

In fact, Black MA beneficiaries saw $1,104 less in total health spending compared to their fee-for-service Medicare counterparts. Latino MA beneficiaries saw average savings of $1,421.

“There is perhaps no more meaningful measurement of a program’s value than its effect on the consumer,” Mary Beth Donahue, president and CEO of the Better Medicare Alliance, said in a press statement. “In Medicare Advantage, we see that consumers are saving nearly $2,000 a year compared to FFS Medicare – savings that have continued to grow over recent years and is all the more valuable considering that over half of all Medicare Advantage beneficiaries live below 200% of the poverty line. With such robust cost protections across demographic groups, the value of Medicare Advantage for the Medicare dollar has never been clearer.”

One key takeaway for home-based care providers is the importance of developing relationships with MA plans, as enrollment continues to grow, according to Rizer.

For context, enrollment in MA has increased by 8.3%, on average, over the last five years. Between 2019 and 2020, enrollment increased by 9.5%. MA penetration reached 46.6% in March 2021, according to data from post-acute analytics and metrics firm Trella Health.

Rizer believes that MA plans are open to the benefits that teaming up with providers will bring to their members.

“Medicare Advantage plans are eager for innovations in care delivery that translate to better beneficiary experiences and more effective, efficient service utilization,” she said. “Home care providers can serve as an important partner in these efforts. They have a view into a person’s life that is incredibly valuable, and they can help to meet needs sooner in a person’s care journey.”

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