Managed Health Care Does Not Provide Better Clinical Outcomes Than Fee-for-Service

Oct 17, 2021

It is often argued that managed health care can provide better clinical outcomes while holding down health care costs. Over the years, managed care has taken on many different names including health maintenance organizations, accountable care organizations, and medical homes for instance.

The structure of managed care is based on a primary care provider who serves as a “gatekeeper” and coordinates the care of an individual patient with multiple specialists. The idea is that the system would be more efficient and would eliminate duplication and waste for an enrollee.

Recently, The Commonwealth Fund released a controlled, but non-randomized, study of managed care versus fee-for-service for Medicare patients. (here) Researchers analyzed data from the 2018 Medicare Current Beneficiary Survey and the Commonwealth Fund 2021 International Health Policy Survey of Older Adults.

A bit of background is needed here. Medicare is government-controlled health insurance for American seniors and has four parts – Part A, fee-for-service hospital care; Part B, fee-for-service provider care; Part C or Medicare Advantage, managed care; Part D, prescription drug supplements. The Commonwealth Fund compared Medicare enrollees who had Parts A plus B with seniors who had Medicare Advantage.

The two groups were not randomized, but were similar in age, race, and the number of chronic conditions each patient had. Both groups had the same level of satisfaction with their health insurance plans. Medicare Advantage costs, on average, four percent more than Parts A plus B but does usually include hearing and vision care. Most Advantage plans use a network of providers that limits provider-choice for enrollees.

The researchers found that clinical outcomes in the two groups were virtually identical. Both groups had the same number of hospitalizations and the same number of emergency room visits. Likewise, there was no difference in out-of-pocket spending and no difference in wait-times to see a provider.

Using virtually identical patient groups, this study explodes the argument that managed care provides better clinical outcomes than fee-for-service care. We do know that managed care can hold down medical costs by rationing or denying care through the gatekeeper system.

Ironically, managed care remains popular. Medicare Advantage continues to expand faster than Parts A and B. Government officials continue to expand state Medicaid programs using the health maintenance model. Yet it is now clear that managed care provides no better clinical outcomes than fee-for-service health care.

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