A new analysis from Inovalon provides one of the most robust and detailed comparisons to date between Medicare Advantage (MA) and traditional Fee-for-Service (FFS) Medicare. Drawing on five years of real-world data spanning pre- and post-Medicare enrollment periods, Inovalon’s study disputes MedPAC’s longstanding claims of favorable selection in MA and concludes the opposite: there is no favorable selection in MA. In fact, the analysis finds that FFS enrollees are healthier and less socially vulnerable than MA enrollees.
Based on actual data from over 140 health plans and covering enrollees from 2018 to 2022, Inovalon evaluated beneficiaries who enrolled directly into MA versus FFS and compared matched cohorts during their first two years of enrollment. The results reinforce two critical findings about the MA program and enrollees:
- Prior to joining Medicare, those enrollees opting for MA are less healthy and incur higher health care costs than those choosing FFS; and
- During their first two years in Medicare, if FFS enrollees had instead received care under MA, their average costs would have been 11% lower.
By using actual MA encounter data — rather than relying on modeled projections based on FFS switchers — and fully adjusting for differences in beneficiary clinical, demographic, and socioeconomic characteristics, Inovalon’s analysis offers a more realistic, apples-to-apples comparison that fundamentally challenges MedPAC’s assertions.
Key Finding #1: No Favorable Selection in MA – In Fact, The Opposite is True
Since 2000, MA enrollment has grown from 17% of Medicare to more than half of eligible beneficiaries in 2025. While MedPAC claims MA attracts healthier individuals due to favorable selection, MedPAC’s assertion primarily relies on so-called “switchers” — those who enroll in FFS and later switch to MA — and does not consider any actual service-level utilization data for MA enrollees. “The subset of beneficiaries and data used by MedPAC,” Inovalon articulates in its report, “does not reflect the actual full population of MA enrollees.”
To credibly compare the value of MA vs. FFS, Inovalon’s analysis controls for differential selection into the two programs and uses detailed patient characteristics, diagnoses, and utilization prior to Medicare eligibility – the analysis goes far beyond merely the use of risk scores. The analysis reveals that those who enroll directly into MA at age 65 are sicker and more socially vulnerable than their FFS counterparts. Specifically, Inovalon found:
- MA enrollees have 11% higher risk scores than FFS enrollees before they turn 65, as measured by CMS’s Hierarchical Chronic Condition (HCC) model. And moreover, when comparing similarly risk-scored beneficiaries, MA beneficiaries’ costs were higher than FFS beneficiaries before they enrolled in Medicare.
- Relative to FFS enrollees, MA enrollees exhibit a 21% higher likelihood of having one or more chronic conditions; that disparity grows as the number of conditions increases.
- MA serves more vulnerable populations — including more low-income individuals (44% vs. 30% in FFS), those living alone (45% vs. 38% in FFS), and dually eligible beneficiaries also covered by Medicaid (42% vs. 21% for FFS).
These findings indicate that MA plans serve individuals with greater clinical and social complexity, emphasizing that they do not cherry-pick healthier, more advantaged populations, as some critics suggest.
Key Finding #2: MA Outperforms FFS on Cost and Quality
Using a detailed claims analysis to compare beneficiaries with similar clinical, demographic, and social risk factors, the Inovalon study demonstrates that MA delivers more efficient care than FFS. Compared to matched FFS beneficiaries during the first two years of enrollment, MA enrollees:
- Save 11% more — $84 per member per month — while receiving care that delivers better outcomes across the board;
- Spent less on medical costs ($546 vs. $652 for FFS); and
- Had slightly higher pharmacy costs ($200 vs. $178 for FFS) due to better adherence.
The methodology using linked pre-enrollment private insurance plan claims to control for differences in who enrolls in MA vs. FFS and for potential differences in coding after enrollment was able to isolate the effects of the type of program the beneficiary selected. The lower costs reflect MA’s care coordination model, which yields significantly better outcomes. Compared to matched FFS cohorts, MA beneficiaries experienced:
- 52% fewer emergency room visits;
- 40% fewer hospital admissions;
- 30% fewer inpatient days;
- 126% fewer 30-day readmissions; and
- 71% fewer preventable hospitalizations.
These results underscore MA’s strength in managing chronic conditions and preventing avoidable complications, particularly important for seniors with multiple comorbidities and complex needs.
Bottom Line: MA Serves a More Complex Population, While Providing More Efficient Care at a Lower Cost
As Congress and CMS consider the future of Medicare, these are the latest findings that demonstrate MA delivers better care — in a more cost-effective way — than FFS. MA enrolls more complex, vulnerable patients who benefit from lower costs and improved outcomes. That’s why 35 million Americans and counting choose MA.
Policymakers should take note and ensure Medicare policy is grounded in true apples-to-apples comparisons, not based on analysis reliant on limited data sets and assumptions that paint a misleading assessment of MA.