A new retrospective cohort study by LDI Senior Fellows Aaron Schwartz, Sumedha Chhatre, and Amol Navathe examined whether choosing to switch to risk-based contracts was linked to health care use changes in Medicare Advantage.
“There is a widespread assumption that financial risk will change clinical behavior,” said Schwartz. “Our findings suggest that the reality is more complicated.”
The study found that the effects of switching to risk contracts in Medicare Advantage on utilization were mixed, modest, and often absent.
Reducing low-value health care use—which refers to any health service where the costs and/or harms outweigh the benefits—is of particular concern in the U.S. “These results suggest payment reform alone may be insufficient to meaningfully reduce low-value care in Medicare Advantage,” said Schwartz.