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Why More People are Opting for Medicare Advantage Over Medicare Fee For Service

Switching rate from FFS to Medicare Advantage was over 6 times higher than in the opposite direction in 2021

Sept 13, 2023Recent analytical observations have illuminated a notable trend among beneficiaries to transition from the conventional Medicare fee-for-service (FFS) to Medicare Advantage. A comprehensive study featured in Health Affairs sheds some light on why more and more beneficiaries are leaning towards Medicare Advantage.

From 2007 to January 2023, there’s been a significant jump in those choosing Medicare Advantage. The numbers have shot up from 19 percent in 2007 to 50 percent in 2023. To make sense of these changes, researchers used the CMS Medicare Enrollment Database and the Risk Adjustment Processing System to track how beneficiaries moved between Medicare FFS and Medicare Advantage, and vice versa from 2006 to 2022.

They found that the Medicare Advantage enrollment grew from 6.3 million to a staggering 30.3 million members during this period. And a huge chunk of this growth, somewhere between 61 and 90 percent, came from those ditching FFS for Medicare Advantage. Especially between 2020 and 2022, this switch became the new trend.

Historically speaking, during the 2006-2008 period, individuals seemed to switch between FFS and Medicare Advantage at similar rates. But post-2010, there was a clear tilt towards Medicare Advantage. Fast forward to 2021, and the rate of people switching from FFS to Medicare Advantage was a massive 6.5 times more than the other way around.

Between December 2021 and December 2022, on average, 7.4 percent of beneficiaries made the leap from FFS to Medicare Advantage. In contrast, only 1.2 percent decided to go back to the FFS model.

The data gets even more interesting when you consider specific groups. Black and Hispanic beneficiaries, for instance, led the charge to Medicare Advantage, while White beneficiaries were a tad bit more reserved. Individuals with disabilities and younger beneficiaries also made the switch at increased levels, as well. Those living in highly populated areas also seemed to favor Medicare Advantage more than their rural counterparts.

One trend was clear as day – most of the switching action happened in January or February. This aligns with Medicare’s annual sign-up season. This timing trend isn’t just a fun fact—it impacts how risk scores for new Medicare Advantage members are calculated.

Researchers noted that, “If a beneficiary switches into MA in January, their risk score can be calculated using diagnoses from the previous year. However, if a beneficiary switches later in the year, it is unclear how to define their base year.”

It will be interesting to keep an eye on this data and see if trends continue in a similar direction or if they eventually level out. 

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