Recent increases in Medicare Advantage enrollment may have caused lower spending growth in the fee-for-service (FFS) Medicare population. We identified the counties of largest Medicare Advantage growth and determined if increased enrollment was associated with reduced FFS Medicare spending growth in those counties. We found that 73 percent of counties experienced at least a 5-percentage-point increase in Medicare Advantage penetration between 2007 and 2014, with the most growth occurring in larger and poorer counties in the Northeast and South. The association between Medicare Advantage growth and FFS Medicare costs varied depending on baseline Medicare Advantage penetration: In counties with low baseline penetration, Medicare Advantage growth did not have a significant effect on per capita FFS Medicare spending, whereas in counties in the highest quartile of baseline Medicare Advantage penetration, it was associated with a significant decrease in FFS Medicare spending growth ($154 annually per 10-percentage-point increase in Medicare Advantage). These findings suggest that Medicare Advantage growth may be playing a role in moderating FFS Medicare costs.

Among 4 case-studies of hospital acquisition of physician practices, the primary motivation was financial and competitive motivations. This suggests that policymakers should be mindful of the potential negative effects of these acquisitions on health care costs, as well as the uncertainty of clinical benefits. Policymakers may need supplementary strategies to deliver the goals of reduced costs and improved quality of care.

Hospitals and health systems are increasingly offering their own insurance products, a type of consolidation known as "vertical integration." The relationship between plan-provider vertical integration and quality of care has not been examined extensively or over time. We created a new data set of all vertically integrated Medicare Advantage contracts operating in the period 2011-15 and tracked their characteristics and quality over time. While the percentage of vertically integrated contracts increased slightly between 2011 and 2015, the percentage of all Medicare Advantage enrollees in them declined from 24.4 percent to 22.0 percent. Vertically integrated contracts generally were of higher quality than other contracts, with the largest differences related to enrollee satisfaction. These findings provide the first detailed, longitudinal look at vertically integrated Medicare Advantage plan enrollment and quality.

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