Full-Risk Medicare Advantage and the Health Equity Gap

Socially vulnerable Medicare patients see dramatically better outcomes—including fewer emergency department visits, fewer preventable hospital admissions, and 23.4% to 30% less use of high-risk medications—when their physicians take on full financial risk for their care compared with those in traditional fee-for-service Medicare. That's the core finding of a new study published in the June issue of Population Health, Equity & Outcomes^®, and the subject of this conversation between Ken Cohen, MD, chief medical officer for Optum Health, and host Sophia Humphreys, PharmD, vice president of health system strategy and innovation for The American Journal of Managed Care^®.

The study is the fifth in a series from Optum Health's outcomes research team and APG, drawing on data from more than 15,000 primary care physicians, 5 million patient-years, and 35 health plans. Cohen walked through 3 major takeaways:

1. The data debunks a persistent theory that Medicare Advantage enrolls healthier, lower-cost patients: nearly 68% of full-risk MA beneficiaries and 63% of fee-for-service MA beneficiaries lived in areas of high social vulnerability, compared to just 50% of traditional Medicare beneficiaries.
2. Because the same physicians treated both MA and traditional Medicare patients in the study, the researchers could isolate the effect of the payment model itself, and full-risk MA came out ahead on both quality and efficiency.
3. Most notably, the sicker and more socially vulnerable the patient population, the larger the gains under full-risk MA.

"When physicians and physician organizations accept responsibility for total cost of care in full-risk models, patients experience improved quality and improved efficiency of care," Cohen said. "That's probably the core of the difference between these cohorts of individuals. It's more than just the incentives, it involves a revenue stream that is necessary to create an infrastructure that can care for those patients in a way that's different than in traditional Medicare."

That infrastructure—AI-driven risk stratification, embedded pharmacists, community health workers, and coordinated transitions of care—is funded by savings that only flow back to physician groups under risk-based contracts. In a "spillover" study, physicians experienced in full-risk MA delivered meaningfully better outcomes to their traditional Medicare patients too, with 10% to 15% fewer preventable hospitalizations and readmissions and substantially more wellness visits, despite having no financial incentive to do so.

With CMS's innovation arm pushing toward full accountability for all Medicare beneficiaries by 2030 through models like ACO REACH (Accountable Care Organization Realizing Equity, Access, and Community Health) and its successor, LEAD (Long-term Enhanced ACO Design), Cohen argued health systems still on the sidelines of value-based care need to act now, both for patients and for their own bottom lines.

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