Traditional Medicare versus Medicare Advantage disparities and outcomes

Amanda Kotolski, Ph.D., OTR/L

Approximately 65 million people in the United States are enrolled in Medicare. Aging consumers are faced with decisions regarding their choices of traditional Medicare or enrolling with a Medicare advantage program. Last year, in Florida, 613 Medicare planes were available to enrollees (CoverRight, 2025). In 2023, Medicare Advantage (MA) plan enrollment surpassed traditional Medicare (TM) in enrollment (51%) (Prusynski, R.A., D’Alonzo, A., Johnson, M.P., Mroz, T.M., & Leland, N.E., 2024). However, research studies are showing growing discrepancies of coverage, availability and outcomes of home and community health services. 

Overview

Prior studies have found home health care following a hospital or post-acute care stay to be associated with lower readmissions and mortality, suggesting that home health care may improve continuity of care and patient outcomes after hospitalization. About a third of Medicare home health episodes were preceded by a stay at a hospital, skilled nursing facility, or inpatient rehabilitation facility, underscoring the role of skilled home health care in patients’ transition from hospital and institutional post-acute care settings to home. (Skopec, et al. 2020; Demiralp, et al, 2021). Reductions in home health use may increase the burden on informal caregivers for older adults, particularly in lower-income households. Completed home health referrals are also associated with lower mortality and readmission rates.

Medicare

Traditional Medicare includes Part A and Part B services. Part A (Hospital insurance) includes hospital stays, SNF, hospice and some home health care. Part B (Medical insurance) includes outpatient, doctors’ visits, preventative and medically necessary services. These services are included in the monthly premium that varies based on income and work history, deductibles and co-insurance. There is no prescription medication coverage, dental, vision or hearing and it must be purchased separately. Medigap supplemental policies are available to cover gaps in medical expenses. 

Medicare Advantage plans include Part A and Part B services with some offering tiered prescription plans (Part D), dental, vision and hearing services. Like traditional Medicare, these are based on income and work history for total monthly premiums, have deductibles, co-pays and or co-insurance. Consumers are often drawn to MA policies due to advertised additional benefits such as money back in their monthly social security check, free transportation via ride share and monthly gift cards to CVS or Walgreens for over-the-counter products.

Nevertheless, no medical insurance program is without flaws. TM has a history of fraud and abuse and there is evidence that under traditional Medicare's evolving payment systems for home health; home health agencies have strategically provided services to maximize reimbursement. The agencies are not paid per service in traditional fee for service Medicare but instead receive a prospective payment for a sixty-day episode of care, which may encourage the agencies to selectively serve healthier patients, leading to larger profits. MA typically receives a monthly capitated rate per enrollee to cover all types of services, face financial incentives to minimize total costs. These plans may provide less home health care and or use such care as a substitute for more expensive institutional services. MA plans include roadblocks such as use of health maintenance organizations (HMOs) which require primary care physician referrals for many services, frequently have closed networks, longer wait times, no or limited out of network benefits that potentially limits home health use or use of preferred provider organization (PPO) plans which also have establish networks of providers but are less likely to require referrals to use in- or out-of-network providers, therefore may provide more home health care than HMOs (Loomer, L., Kosar, C.M., Meyers, D.J. & Thomas, K.S., 2020;  Prusynski, et al. 2024; Skopec, et al. 2020).

Medicare and Home health

Medicare covers skilled home health care services, such as skilled nursing and therapy services, for Medicare beneficiaries who need skilled care on a part-time or intermittent basis but are unable to leave their home. (Demiralp, B., Speelman, J.S., Cook, C.M., Pierotti, D., Steele-Adjognon, M., Hudak, N., Neuman, M.P., Juliano, I., Harder, S., &  Koenig, L., 2021; Skopec, L., Zuckerman, S., Aarons, J., Wissoker, D., Huckfeldt, P.J., Feder, Berenson, R.A., Dey, J. & and Oliveira, L., 2020). Home and community health Occupational therapy services are covered by Part B services and subject to deductibles. All home health care agencies are required to use the Home Health Outcome and Assessment Information Set (OASIS) and Medicare Master Beneficiary Summary File. This was established for uniformity and reporting of home and community health services and must be completed by home health agencies for both MA and TM patients upon initiation of a home health care episode, when an episode is discontinued (even temporarily), and every sixty days during a home health period.  The agencies have financial incentives to submit comprehensive and accurate data, as CMS may reduce annual payment updates by up to 2 percentage points for incomplete data submissions. OASIS data is publicly available for review and often used in research and outcome studies (Centers for Medicare and Medicaid services, 2025). 

Populations

Compared with TM beneficiaries, MA beneficiaries were younger, more likely to be Black, and more likely to have originally qualified for Medicare based on disability (Boudreau, E., Schwartz, R., Schwartz, A.L., Navathe, A., Caplan, A., Li, Y., Blink, A., Racsa, P., Drzayich Antol, D., Erwin, J., Shrank, W.M., & Powers, B.W., 2022). MA patients were 5% more likely to be discharged to the community and used home health agencies with lower star ratings than traditional Medicare enrollees did (Skopec, et al, 2020).  Almost 1 in 3 patients (29%) discharged from a hospital with a discharge status of home health do not receive home health care. Highest are 17% of joint/musculoskeletal patients, 38% among digestive/endocrine patients with an additional 30% refusal post-acute care due to insurance coverage criteria, poor care coordination, and variability in clinicians’ decisions on who needs post-acute care. Incomplete HHA referrals were also more likely to be male (44.0% vs. 41.4%) and nonwhite (16.6% vs. 11.7%), more likely be dual-eligible (19.1% vs. 12.5%) and be originally enrolled in Medicare due to disability or end-stage renal disease (17.1% vs. 13.2%).

Consumer awareness

In 2016, the home health 5-star ratings were introduced based on client and or patient feedback based on satisfaction surveys. Once published, consumers were able to research and choose medical facilities based on the rating system. This brought significant improvement to consumer-based services with facilities wanting to improve and seek highest rating possible to increase revenue.  Improvements for all patients were noted with the exception of Hispanic/latine and Asian American/Pacific Islander patients. Black and lower-income Medicare home health patients experienced the greatest increases in choosing high-quality home health agencies following the introduction of the star ratings as compared with their White/Caucasian and high-income counterparts. (Schwartz, M.L., Rahman, M., Thomas, K.S, Konetzka, R.T., Mor, V., 2022).  It may be the case that home health agencies were no longer serving or may no longer be located and or avoiding certain communities that may be considered “riskier.” (Fashaw-Walters, S.A., Rahman, M., Gee, G., Mor, V., Rivera-Hernandez, M., Ford. C. & Thomas, K.S., 2023).

Primarily white/Caucasian and higher socio-economical populations historically have more 5 star rated Home Health Agencies (HHA) within their neighborhoods, which did not greatly influence their home health outcomes when the rating system began. However, minorities had access to poorly rated HHA due to where they reside and HHA not having brick and mortar within their community. With the implementation of the rating system, minorities besides Latine and pacific islander, have made significant improvements in overall care due being able to research and selecting higher rated HHA for services.

Medicare awareness and the occupational therapy practitioner

Awareness of Traditional Medicare (TM) versus Medicare advantage (MA) programs policies and provisions are vital to the Occupational therapy practitioner (OTP). Not only do we need to be aware of the type of Medicare coverage, its advantages and disadvantages and its undue influence on occupational therapy services (initiation, frequency and duration). OTP have a unique perspective to complete patient education regarding their medical knowledge at a personal and population level. There are multiple aspects within the Occupational therapy practice framework: domain and process that provide us with guidance. 

The first area is under Health Management: Communication with the health care system: expressing and receiving verbal, written, and digital communication with healthcare and insurance providers, including understanding and advocating for self or others. Also, under Environmental Factor: Services, systems, and policies: benefits, structured programs, and regulations for operations, provided by institutions for various sectors of society, designed to meet the needs of a persons, groups, or populations. Through Education (Imparting of knowledge and information about occupation, health, well-being, and participation to enable the client to acquire healthful behaviors, habits, and routines), Advocacy (Efforts directed towards promoting occupational justice and empowering clients to seek and obtain resources to support health, well-being, and occupational participation), Self-advocacy (efforts undertaken by the client supported by the practitioner) and Occupational justice (access to and participation in the full range of meaningful and enriching occupations afforded to others, including opportunities for social inclusion and resources to participate in occupations to satisfy personal, health, and societal needs) we can improve client care and outcomes leading to better quality of life (AOTA, 2020). 

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References[KM1] 

American Occupational Therapy Association. (2020). Occupational Therapy Practice Framework: Domain and process (4^th ed.) American Journal of Occupational Therapy, 74(Suppl.2), 7412410010. https://doi.org/10.5014/ajot.2020.74S2001

Boudreau, E., Schwartz, R., Schwartz, A.L., Navathe, A., Caplan, A., Li, Y., Blink, A., Racsa, P., Drzayich Antol, D., Erwin, J., Shrank, W.M., & Powers, B.W. (2022). Comparison of Low-Value Services Among Medicare Advantage and Traditional Medicare Beneficiaries. JAMA Health Forum. 2022;3(9):e222935. doi:10.1001/jamahealthforum.2022.2935

Centers for Medicare and Medicaid. (2025). OASIS data sets. Retrieved from https://www.cms.gov/medicare/quality/home-health/oasis-data-sets

CoverRight. (May 17, 2025). Compare Medicare Plans in Florida (May 2025).  Retrieved from: https://coverright.com/compare-medicare-plans/florida/

Demiralp, B., Speelman, J.S., Cook, C.M., Pierotti, D., Steele-Adjognon, M., Hudak, N., Neuman, M.P., Juliano, I., Harder, S., &  Koenig, L., (2021). Incomplete Home Health Care Referral After Hospitalization Among Medicare Beneficiaries. Journal of the post-acute and long-term care medical association; 22: 1022-1028. 

Fashaw-Walters, S.A., Rahman, M., Gee, G., Mor, V., Rivera-Hernandez, M., Ford. C. & Thomas, K.S. (2023). Potentially More Out of Reach: Public Reporting Exacerbates Inequities in Home Health Access. The Milbank Quarterly, Vol. 101, No. 2, 2023 (pp. 527-559).

Loomer, L., Kosar, C.M., Meyers, D.J. & Thomas, K.S. (2020). Comparing Receipt of Prescribed Post-acute Home Health Care Between Medicare Advantage and Traditional Medicare Beneficiaries: an Observational Study. Journal of General Internal Medicine: 36(8):2323–31. DOI: 10.1007/s11606-020-06282-3

Prusynski, R.A., D’Alonzo, A., Johnson, M.P., Mroz, T.M., & Leland, N.E. (2024). Differences in Home Health Services and Outcomes Between Traditional Medicare and Medicare Advantage. JAMA Health Forum. 2024;5(3):e235454. doi:10.1001/jamahealthforum.2023.5454 

Skopec, L., Zuckerman, S., Aarons, J., Wissoker, D., Huckfeldt, P.J., Feder, Berenson, R.A., Dey, J. & and Oliveira, L. (2020). Home Health Use in Medicare Advantage Compared to use in Traditional Medicare. HEALTH AFFAIRS, 39, NO. 6 (2020): 1072-1079. DOl: 10.1377 /hlthaff.2019.01091

Schwartz, M.L., Rahman, M., Thomas, K.S, Konetzka, R.T., Mor, V. (2022).  Consumer selection and home health agency quality and patient experience stars. Health Services Research;57(1):113-124. https://doi.org/10.1111/1475-6773.13867