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The Growing Importance of Medicare Advantage in Health Policy and Health Services Research

  • 1Brown University School of Public Health, Providence, Rhode Island
  • 2College for Public Health and Social Justice, Saint Louis University, St Louis, Missouri

Medicare Advantage (MA) is rapidly growing. Enrollment in the program has increased from 26% of Medicare in 2012 to 42% in 2021, now including more than 24 million beneficiaries.1 In MA, private plans are paid on a capitated basis by the Centers for Medicare and Medicaid Services (CMS) to cover the health care needs of their enrollees. In addition to capitated payment, MA differs from the traditional Medicare (TM) program in that plans can use selective contracting to set specific networks of providers and can offer supplemental benefits not available in TM, such as dental coverage, vision coverage, gym memberships, transportation, and meals services.2 Medicare Advantage plans often have lower premiums than TM and include annual out-of-pocket payment caps. These differences in costs and additional benefits have contributed to the rapid growth in MA enrollment. The Congressional Budget Office projects that approximately half of Medicare beneficiaries will elect to enroll in MA by 2030.3

Recent growth in MA comes with implications for numerous Medicare policies. Many current payment models in Medicare presume TM is the dominant insurer for most beneficiaries. For example, in many new TM models, such as accountable care organizations, the Merit-Based Incentive Payment System, and bundled payments, MA enrollees are excluded. Even more pressing, CMS sets payment benchmarks for MA based on TM expenditures in each county. In 2020, MA penetration exceeded 50% in some metropolitan counties. When the majority of beneficiaries in a county are enrolled in MA, beneficiaries who remain in TM may not be an appropriate comparison group when setting MA payment rates.

The growth of MA enrollment raises substantial issues in current health policy and health services research. Traditionally, in most studies of Medicare, researchers have excluded MA beneficiaries. These exclusions are largely driven by limited data. Because CMS pays plans per capita, less data has generally been available on these beneficiaries. Medicare Advantage enrollees are not included in standard claims data, and commonly used research tools, such as the CMS Chronic Conditions Warehouse, do not include chronic condition data for MA. Those who opt to enroll in MA may be substantially different than those who choose TM, which may introduce selection bias into research designs.4 However, as more beneficiaries enroll in MA, the question then becomes who is electing to remain in TM and what biases might that create. Excluding MA enrollees from Medicare research may have been acceptable when that exclusion would remove relatively few beneficiaries from a study, but now that MA enrollment is much higher, it may no longer be acceptable for sound research design.

Racial and ethnic equity concerns also arise when excluding MA enrollees from policy research. Black and Hispanic Medicare beneficiaries disproportionately enroll in the MA program.5 As these beneficiaries enroll in MA at higher rates, inequities in care may not be fully captured if MA enrollees are excluded from research.6

What can researchers do to address these concerns? Several available data sets may be useful to study both MA and TM beneficiaries. The Medicare Provider Analysis and Review (MedPAR) includes up to 90% of MA hospitalizations nationally.7 Medicare Part D claims for prescription drugs are also available for both MA and TM beneficiaries. Postacute and long-term care assessment data from the Minimum Dataset, the Outcome and Assessment Information Set for home health, and the Inpatient Rehabilitation Facility Patient Assessment Instrument are all mandated by CMS to include MA enrollees. The Centers for Medicare and Medicaid Services also fields the Consumer Assessment of Healthcare Providers and Systems for all Medicare enrollees, and the Medicare Current Beneficiary Survey samples both MA and TM beneficiaries. While not available for TM, the Health Outcomes Survey also provides important data on health and functional status. These data sources have been creatively used in past work to allow for the inclusion of MA in study samples.8

The Centers for Medicare and Medicaid Services should take action to make more MA data available for inclusion in research studies. Very little information is available about MA payments, network design, and supplemental benefit use. An important step in the right direction was the release of MA encounter data, which are now available from 2015 through 2018. These data include outpatient and inpatient visits, similar to data available in TM Part A and B claims. While these files will play an important role in research moving forward, their accuracy has been questioned by the Medicare Payment Advisory Commission.9 Furthermore, these data must be purchased separately from TM claims data, requiring greater costs for researchers to study the entire Medicare population. To inform Medicare policy decisions, CMS should ensure that these costs do not impair researchers’ access to detailed and accurate data about MA enrollees.

As growth in MA continues, understanding the performance of different MA contracts will become more important. The Centers for Medicare and Medicaid Services uses a 5-star rating system based on approximately 35 measures to evaluate the performance of plans and, under the quality incentive program, pays up to a 5% bonus to higher-rated plans. While these ratings may be associated with some improvements in quality,10 there is likely room for improvement. There is also a limited understanding of variation in network breadth and quality as well as spending in the program. As MA represents a larger share of Medicare, understanding its performance will be as important as the efforts to understand the performance of innovations in TM, such as accountable care organizations .

While the growth of MA presents challenges to policy makers and researchers, it also creates valuable opportunities. Medicare Advantage plans have flexibility in developing their benefit design, provider networks, and other services, including an ability to address beneficiaries’ social determinants of health in ways that the TM program does not.2 These variations in MA plan offerings allow for a range of research questions to test what does and does not work for improving beneficiaries’ outcomes and experiences in the Medicare program. With the continuing steady growth of MA, more work is needed by researchers and policy makers to understand its role in Medicare and how MA plans can best meet the needs of Medicare beneficiaries.

Article Information

Open Access: This is an open access article distributed under the terms of the CC-BY License. © 2021 Meyers DJ et al. JAMA Health Forum.

Corresponding Author: David J. Meyers, 121 S Main Street, Providence, RI, 02912 (

Conflict of Interest Disclosures: Dr Johnston reported receiving grants from NIH-NIA R21AG065526 outside the submitted work. No other disclosures were reported.

Centers for Medicare and Medicaid Services. MA State/County Penetration 2021. Published October 19, 2020. Accessed February 4, 2021.
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Congressional Budget Office. Medicare—CBO’s Baselines. Published March 19, 2020. Accessed March 23, 2021.
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Huckfeldt  PJ, Escarce  JJ, Rabideau  B, Karaca-Mandic  P, Sood  N.  Less intense postacute care, better outcomes for enrollees in Medicare Advantage than those in fee-for-service.   Health Aff (Millwood). 2017;36(1):91-100. doi:10.1377/hlthaff.2016.1027PubMedGoogle ScholarCrossref
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MedPAC. Ensuring the accuracy and completeness of Medicare Advantage encounter data. In: Report to the Congress: Medicare and the Health Care Delivery System. Published June 2019. Accessed March 23, 2021.
Meyers  DJ, Trivedi  AN, Wilson  IB, Mor  V, Rahman  M.  Higher Medicare Advantage star ratings are associated with improvements in patient outcomes.   Health Aff (Millwood). 2021;40(2):243-250. doi:10.1377/hlthaff.2020.00845PubMedGoogle ScholarCrossref
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