Unbiased Analysis of Today's Healthcare Issues

Does getting cancer incentivize individuals to switch from Medicare managed care to FFS?

Written By: Jason Shafrin - Nov• 08•11

Medicare beneficiaries have a choice: pick the standard Medicare fee-for-service (FFS) benefit or rely on managed care plans to supply their healthcare through the Medicare Advantage (MA) program.  Many Medicare beneficiaries prefer MA because it offers them lower out-of-pocket costs and provide benefits not available in the traditional FFS Medicare program. Other beneficiaries prefer the FFS benefit because MA plans typically restrict provider choice in an effort to control costs.

The quality of care in Medicare MA relative to FFS, however, has still not yet been consistently evaluated.  Because beneficiaries can switch from MA to FFS each year, if quality is low, healthy individuals may prefer MA to reap the reduced cost sharing benefits, but when they become sick they may switch to Medicare FFS.

A study by Elkin and co-authors evaluates whether or not this is the case for beneficiaries who get cancer.

Data and Methodology

We identified Medicare managed care enrollees aged 65 years or older who were diagnosed with a first primary breast (n = 28 331), colorectal (n = 26 494), prostate (n = 29 046), or lung (n = 31 243) cancer from January 1, 1995, through December 31, 2002, in Surveillance, Epidemiology, and End Results (SEER) cancer registry records linked with Medicare enrollment files. Cancer patients were pair-matched to cancer-free enrollees by age, sex, race, and geographic location. We estimated rates of voluntary disenrollment to fee-for-service Medicare in the 2 years after each cancer patient ’ s diagnosis, adjusted for plan characteristics and Medicare managed care penetration, by use of Cox proportional hazards regression.


The authors find that MA beneficiaries with cancer are less likely to switch to FFS than a cancer-free beneficiary. The hazard ratios range from 0.78 for colorectal cancer to 0.86 for prostate cancer. The results were consistent across various age, sex, race, cancer stage and region strata.

The likely reason for this finding is that people who have a serious disease do not want to change coverage. Even if the FFS benefit offers improved access to better care, there are significant costs of switching coverage. The new FFS providers may have less knowledge of the individual beneficiary’s health condition and the change can be stressful for the beneficiary as well. A worthwhile analysis to confirm whether this is the case would be to examine whether FFS beneficiaries who contract cancer are more likely to switch to a MA plan after contracting cancer. If the transaction cost/care coordination is driving Elkin’s results, then FFS beneficiaries with cancer should also be less likely to switch to MA than cancer-free FFS beneficiaries.

It could also be the case that MA provides high quality care for the most prevalent cancers (i.e., prostate, lung, colorectal, and breast), but there is a significant improvement in quality when beneficiaries visit FFS providers when they have rarer diseases. To confirm whether or not this is the case, the authors examine whether beneficiaries with non-Hodgkin lymphoma, acute leukemia, and soft tissue sarcoma are more likely to switch to FFS. The authors found no effect of these cancer diagnoses on the likelihood of disenrollment from a managed care plan.


You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Leave a Reply

Your email address will not be published. Required fields are marked *