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Two-Sided Risk Models Linked With Reduced Acute Care Use in Medicare Advantage


Medicare advantage beneficiaries who received care from providers in 2-sided risk payment models had lower rates of acute care use, according to new study findings.

New data published in JAMA Network Open Thursday revealed 2-sided risk models were associated with lower rates of acute care use among Medicare Advantage (MA) beneficiaries, especially for potentially avoidable events.

The study was led by a team at Humana and is based on the insurance plan’s MA members, of whom two-thirds are cared for by a provider in a value-based payment model. The authors said to their knowledge, it is the first peer-reviewed study of value-based payment in MA.

In recent years, Medicare has increasingly shifted away from fee-for-service (FFS) reimbursement models and toward value-based payment structures aimed at rewarding improving quality and controlling spending.

“We've seen far more rapid adoption of value-based models in Medicare Advantage than we have in traditional Medicare, and certainly a lot more than in Medicaid or commercial,” said William Shrank, MD, MSHS, chief medical officer at Humana, in an interview with The American Journal of Managed Care® (AJMC®).

Data from the Learning and Action Network show that in 2020, 58% of MA beneficiaries received care from physicians in value-based arrangements, compared with 43% of those in traditional Medicare, and around 35% each of Medicaid or commercial beneficiaries, Shrank said.

But despite numerous studies evaluating these models in traditional Medicare, less is known about the MA population.

To address this knowledge gap, researchers identified beneficiaries enrolled in the MA organization between January 2017 and December 2019. Individuals were divided based on their attributed primary care organization’s payment model: FFS, shared savings with upside-only financial risk; and shared savings with upside and downside financial risk (2-sided risk).

Claims data were used to identify hospitalizations, observation stays, or emergency department (ED) visits throughout the study window; these were then categorized into avoidable and all-cause events.

The final analysis included a total of 489,796 beneficiaries, of whom 16.6% were in an FFS model, 32.4% in upside-only risk, and 51% in 2-sided risk. Researchers found those in 2-sided risk models had lower rates of all 3 outcomes compared with individuals in FFS models.

Specifically, adjusted analyses showed:

  • The adjusted rate of ED visits per 1000 patients for 2-sided risk models was 375.8 (95% CI, 370.9-380.7) compared with 434.1 (95% CI, 426.5-441.9) for FFS
  • Compared with FFS, 2-sided risk models were associated with a 15.6% (95% CI, 14.2%-17%) relative reduction in avoidable hospitalizations, compared with 4.2% (95% CI, 3.4%-4.9%) for all-cause hospitalizations
  • No significant differences in use were found between beneficiaries cared for under upside-only risk models and FFS for all outcomes

In addition, the link between value-based payment and decreased use was most pronounced for measures of avoidable care, authors wrote—a finding consistent with studies carried out in traditional Medicare settings.

“It’s really compelling…to see reductions in health services use across the board, hospitalizations, observation stays, ED visits, in patients that are cared for in value-based arrangements. But I think it's even more notable how dramatic the reductions are in avoidable health services use, avoidable hospitalizations, avoidable, ED visits,” Shrank stressed.

“It really speaks to the fact that providers participating in risk-based value-based models are doing something meaningfully different. And for patients with complex chronic conditions, they're caring for those patients in a way that really meaningfully reduces their need to be hospitalized or to get acute care. That should be reassuring,” he added.

Due to the study’s retrospective nature, residual confounding may have been present, while it is likely selection bias exists with regard to which primary care organizations engage in value-based payment models.

More natural experiments or additional models examining when patients switch from one type of care to another can help address this bias and are currently being pursued, Shrank said.

However, the lack of differences seen between the FFS and upside-only risk populations suggests downside risk may play a key role in effective value-based payment arrangements, authors wrote.

“I think that once providers take 2-sided risk, they're making a bigger commitment. And that bigger commitment, I believe, is associated with more meaningful investments in the technology, and the care models that are needed to really drive better health outcomes,” Shrank said.

Providers that are committed to taking downside risk are also “making a more intentional set of decisions around how to how to operate their practices to drive better experiences and better health outcomes for patients,” he added.

More research is needed to better understand the actions of value-based primary care organizations associated with reductions in acute care use, authors concluded.


Gondi S, Li Y, Antol DD, Bourdreau E, Shrank WH, and Powers BW. Analysis of value-based payment and acute care use among medicare advantage beneficiaries. JAMA Netw Open. Published online March 17, 2022. doi:10.1001/jamanetworkopen.2022.2916

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