The other side of the story
The headlines are ripping Medicare Advantage (MA) apart due to supposed huge overpayments compared with traditional Medicare fee-for-service (FFS). Critic MedPAC and aligned academics and researchers have argued MA abuses risk adjustment coding and somehow has favorable selection. We know that any risk adjustment abuse was largely that of larger players and that the new v28 risk adjustment payment model has reduced most overscoring incentives. As well, the Centers for Medicare and Medicaid Services (CMS) has just barred scoring of unlinked medical charts (those that do not have accompanying encounters) with one exception.
But MedPAC and others will continue to cite major overpayments because of faulty or misleading analysis regarding favorable selection in the program. I have made the case over the years that many studies show that MA attracts a more diverse and lower income population. Within this population are individuals who are dual eligible and have many social determinant barriers to good health. This alone is a signal that favorable selection is not a fact in MA.
To help fight the concerted effort by opponents to distort MA’s success, here are a few recent studies that show how MA saves on overall costs, does not really have favorable selection, and saves seniors and those with disabilities in the program.
Milliman
A Milliman analysis finds that MA delivered $185 per member per month in additional value ($59.9 billion in 2024) and that government spending on MA was modestly lower (4%) compared to the traditional program. Further, beneficiary costs were nearly a third (29%) lower than FFS.
Humana
A new Humana report tells a compelling story on value-based care (VBC) arrangements. It says there was a 24.3% decrease in inpatient admissions, or a 229,000-stay dip, for MA members in VBC arrangements versus those in traditional Medicare in 2024. MA members in VBC arrangements also saw 7.6% fewer inpatient admissions compared to those in non-value-based care MA arrangements. Humana estimates $12.8 billion in savings due to MA value-based arrangements.
FTI
An FTI Consulting analysis identified flaws in MedPAC’s data and assumptions on favorable selection. Flaws included:
- An over-reliance on “switchers” (beneficiaries who moved from FFS to MA)
- The exclusion of key groups in the analysis (ESRD kidney, Part A only, and secondary payer populations)
- No accounting for differences between dual-eligible and Special Needs Plan (SNP) members and traditional populations.
- MedPAC also did not incorporate plan bids into its cost analysis.
Harvard/Inovalon
A Harvard Medical School and Inovalon analysis contrasted with MedPAC’s assumption that healthier beneficiaries disproportionately select MA. That assumption drove the favorable selection overpayment finding. The Harvard and Inovalon finding was that, immediately prior to enrollment, MA enrollees are modestly less sick than their FFS enrollee counterparts (with about 10% lower risk scores).
Elevance Public Policy Institute
The Elevance Public Policy Institute (EPPI) published a study on March 23 on MA enrollment and total Medicare spending. It found that a 10-percentage point higher MA penetration was associated with 1.5% lower total Medicare spending per capita. Such higher penetration results are estimated to have been $111 billion from 2012 to 2021 compared to if MA penetration held steady at 2011 levels. After adjusting for coding intensity — yielding a 1.1% spending reduction, instead — estimated savings would have been $83 billion.
The study’s findings suggest that the recent growth of MA has played a key role in moderating overall Medicare program spending. See that study here: https://journals.sagepub.com/doi/10.1177/00469580261433163 .
In 2024, EPPI found something very similar. It also concluded that higher MA penetration is associated with lower total Medicare spending per capita, both across U.S. counties and year-over-year within a county. If MA penetration had stayed constant at 2011 levels, cumulative savings in total Medicare spending from 2012-2021 are estimated to be as high as $144 billion (in 2021 dollars).
Savings to enrollees
An ATI Advisory and Better Medicare Alliance briefer in 2024 showed major beneficiary savings as a result of MA in 2021. It says MA beneficiaries spent $2,541 less on out-of-pocket costs and premiums than FFS beneficiaries, 40% less overall. In an updated report in 2025 on 2022 data, MA enrollees spent an average of $3,486 less in out-of-pocket health care expenses than FFS enrollees, 46% lower costs overall. More important, for those with 3 or more chronic conditions in MA, they spent $4,120 less than comparable FFS beneficiaries. Thus, those in FFS with 3 or more conditions spent almost double what MA enrollees did.
An Inovalon and Harvard analysis in 2025 says that after controlling for demographic, clinical, geographic, and social-risk factors, FFS enrollees had 11% higher total costs than similar MA enrollees. It also reports higher utilization in FFS for emergency visits (52%), admissions (40%), inpatient days (30%), readmissions (126%), and preventable hospitalizations (71%).
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— Marc S. Ryan
