Medicare Advantage Hospital Readmission Rates Substantially Lower than FFS

An article in the American Journal for Managed Care found that Medicare Advantage (MA) patients experienced a much lower 30 day hospital readmission rate than FFS patients.  The study found the MA readmission rate was 14.5 percent during 2006-2008, which was 22 percent lower than the FFS readmission rate.  After adjusting for risk and excluding disabled beneficiaries, the study found that MA readmission rates were 13 to 20 percent lower than FFS.  MA capitation rates provide a  strong financial  incentive for MA plans to reduce avoidable hospitalizations and readmissions, for example through the use of case management or network contracting arrangements.  FFS has no incentives to control avoidable readmissions but that should change under a new program announced in 2011 that seeks to reduce FFS readmission rates by 20 percent.