Increased Medicare Advantage Penetration Is Associated With Lower Postacute Care Use For Traditional Medicare Patients

Medicare Advantage (MA) plans, which accounted for 45 percent of total Medicare enrollment in 2022, are incentivized to minimize spending on low-value services. Prior research indicates that MA plan enrollment is associated with reduced postacute care use without adverse impacts on patient outcomes. However, it is unclear whether a rising MA enrollment level is associated with a change in postacute care use in traditional Medicare, especially given growing participation in traditional Medicare Alternative Payment Models that have been found to be associated with lower postacute care spending. We hypothesize that market-level MA expansion is associated with reduced postacute care use among traditional Medicare beneficiaries-a "spillover" effect of providers modifying their practice patterns in response to MA plans' incentives. We found increased MA market penetration associated with reduced postacute care use among traditional Medicare beneficiaries, without a corresponding increase in hospital readmissions. This association was generally stronger in markets with a greater share of traditional Medicare beneficiaries attributed to accountable care organizations, suggesting that policy makers should account for MA penetration when evaluating potential savings in Alternative Payment Models within traditional Medicare.