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March 16, 2017

Provider-owned Medicare plans may have an edge in patient satisfaction, study suggests

Daily Briefing

Medicare Advantage (MA) plans offered directly by hospitals score better on measures of customer service than such plans offered by traditional insurers, according to a new study published in Health Affairs.

Study details

The study was completed by Austin Frakt, a health economist at the Veterans Affairs Boston Healthcare System, and colleagues at Harvard Medical School. It compared CMS star ratings of hospital- or health system-owned MA plans with traditional MA plans between 2011 and 2015. The analysis included both MA and Medicare Part D.

The study assessed the quality of plans by looking a CMS' overall quality score for MA and Part D plans, as well as certain CMS sub-measures of quality, including screenings and patient safety. Frakt and colleagues adjusted each plans' quality score based on local demographics, CMS beneficiary risk score data, overall Medicare spending, and other factors. The study also created one overall measure of quality for each plan based on its MA and Part D quality scores.

Key findings

When measured on a one-to-10 star scale, the study found provider-owned plans' unadjusted scores were 0.75 higher than traditional plans. However, this difference narrowed over the study period, dropping from 0.92 in 2011 to 0.58 in 2015. When adjusting for factors such as local demographics, CMS beneficiary risk score data, and overall Medicare spending, the study found that provider-owned plans' star ratings were:

  • 0.64 higher than traditional plans on the composite measure than traditional plans;
  • 0.35 higher on MA; and
  • 0.30 higher on Medicare Part D.

As with unadjusted quality scores, these scores narrowed over the study period.

When the researchers looked at CMS' sub-measures of quality, they found that provider-owned plans "really shine" on measures related to plan responsiveness and care, enrollee experience, and how plans handled complaints—in fact, for each area of customer service that the researchers assessed, "provider-offered plans [were] rated one-half star higher than insurer -offered ones," Frakt writes in an essay for the New York Times's "The Upshot." Moreover, the researchers found that provider-owned plans performed "somewhat better" on certain clinical quality measures, such as rates of preventive screening and the management of chronic conditions.

That said, the study authors noted that the study does not show a causal link between provider-owned plans and higher quality. "Nevertheless, such tight integration between plans and providers is at least a signal of higher quality, even if it doesn't cause it," Frakt writes.


Frakt writes that there are several explanations as to why provider-owned plans may provide better customer service than traditional plans. One factor, he explains, is that they eliminate the middle man between insurer and provider.

For instance, traditional plans that encounter a beneficiary with questions about a hospital bill are likely to refer him or her to the provider. Hospitals also may pass off some complaints to the insurers. "However, when the plan and hospital are one and the same, neither can pass the buck to the other," Frakt writes. "This could lead to the higher customer satisfaction reflected in the quality ratings."

But the problem, Frakt writes, is that it is sometimes hard to tell when plans are provider owned—a difficulty that also explains why there's "been so little analysis of provider versus insurer plans" (Frakt, "The Upshot," New York Times, 3/13; Johnson et al., Health Affairs, March 2017).

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