Dataset Information

Growing divergence between Medicare Advantage plan bids and payments to plans.

ABSTRACT: As the Medicare Advantage (MA) program grows in enrollment and costs, there has been increasing concern that federal payments to MA plans exceed necessary levels. Estimates suggest that, in 2023, MA plans were paid up to 6% more per enrollee than would have been spent had that beneficiary instead enrolled in traditional Medicare (TM). We evaluated the factors driving this overpayment, characterizing trends in MA benchmarks, bids, and total payments from pre-Affordable Care Act (pre-ACA) levels through 2023. We found that, despite an overall decrease in risk-adjusted bids relative to average risk-adjusted TM enrollee costs, total payments to plans have modestly increased since 2015. Decomposing these trends into various factors in the MA payment formula, we found that divergent trends in benchmarks and bids are, in part, due to the increasing influence of payment adjustments, such as quartile spending adjustments, quality bonus payments, and risk adjustment. Our results suggest that current payment rules have contributed to overpayments and policy reform may be necessary.

SUBMITTER: McCormack G

PROVIDER: S-EPMC11342956 | biostudies-literature | 2024 Aug

REPOSITORIES: biostudies-literature

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Growing divergence between Medicare Advantage plan bids and payments to plans.

McCormack Grace G Trish Erin E

Health affairs scholar 20240805 8

As the Medicare Advantage (MA) program grows in enrollment and costs, there has been increasing concern that federal payments to MA plans exceed necessary levels. Estimates suggest that, in 2023, MA plans were paid up to 6% more per enrollee than would have been spent had that beneficiary instead enrolled in traditional Medicare (TM). We evaluated the factors driving this overpayment, characterizing trends in MA benchmarks, bids, and total payments from pre-Affordable Care Act (pre-ACA) levels t ...[more]

PMID: 39184308

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Project description:ImportanceHealth insurance literacy helps individuals make informed choices. However, evidence suggests that Medicare beneficiaries experience low health insurance literacy, leading to high-cost or poor-quality coverage choices.ObjectiveTo examine how health insurance literacy was associated with coverage choices between traditional Medicare (TM) and Medicare Advantage (MA), as well as within MA.Design, setting, and participantsThis cross-sectional study included 6627 TM and MA enrollees, using data from the 2015-2016 Medicare Current Beneficiary Survey. Data analyses were conducted between May 1 and June 30, 2021.ExposuresThree self-reported measures of health insurance literacy (presence of information to make an informed comparison, ease in reviewing and comparing coverage options, and annual review and comparison of coverage options).Main outcomes and measuresEnrollment in TM vs MA and enrollment in an MA plan with different characteristics (star rating, monthly plan premium, in-network maximum out-of-pocket limit, plan type, and provision of supplemental benefits).ResultsWe included 6627 Medicare beneficiaries (3578 women [54.0%]; mean [SD] age, 75.13 [7.12] years). A total of 77 individuals were Asian (1.2%), 696 were Black (10.5%), 488 were Hispanic (7.4%), 5277 were non-Hispanic White (79.6%), and 225 (3.4%) were single races not of Hispanic origin (including American Indian or Alaska Native and Native Hawaiian) or were 2 or more races. Medicare Advantage enrollment was higher among individuals with higher health insurance literacy than those with lower health insurance literacy, especially for those who reviewed or compared coverage options annually than among those who did not (38.0%; 95% CI, 36.0%-40.1% vs 27.8%; 95% CI, 25.8%-29.7%). Among MA beneficiaries, those who reviewed or compared coverage options annually were more likely to enroll in plans with 4 to 4.5 stars and plans with monthly premiums of $1 to $50 by 4.6 percentage points (95% CI, 0.1-9.2 percentage points) and 4.8 percentage points (95% CI, 0.6-9.0 percentage points), respectively. However, enrollment in plans with 5 stars was 3.8 percentage points lower (95% CI, -5.8 to -1.9 percentage points) among individuals who reviewed or compared coverage options annually than among those who did not. Among individuals with low socioeconomic status, the likelihood of reviewing or comparing coverage options annually was lower for those with Medicare and Medicaid dual eligibility than for those without it (odds ratio, 0.79; 95% CI, 0.63-0.99).Conclusions and relevanceResults of this study suggest that higher health insurance literacy-particularly, annual review and comparison of coverage choices-is associated with higher MA enrollment and choice of a particular MA plan. Policy makers should develop programs to encourage frequent review and comparison of coverage options for informed decision making.

Project description:ImportanceVarious policy proposals would reduce federal payments to Medicare Advantage (MA) plans. However, it is unclear whether payment reductions would compromise beneficiary access to the MA program.ObjectiveTo quantify the association between MA payment reductions under the Affordable Care Act (ACA) and MA enrollment growth.Design, setting, and participantsThis retrospective cohort study examined the MA market before and after the ACA, which mandated cuts to MA benchmark payment rates. Using 2008 to 2019 county-level enrollment and payment data, a difference-in-differences analysis was conducted comparing MA enrollment changes between counties with larger vs smaller benchmark reductions, before vs after the ACA.Main outcomes and measuresThe primary outcome was the MA enrollment rate, defined as the proportion of a county's Medicare beneficiaries enrolled in MA. A secondary analysis examined MA plan payments per member per month.ResultsAmong 3138 counties with 37 639 county-year observations, ACA-induced benchmark cuts were sizeable and varied, ranging from 0% to 42.9% (mean [SD], 5.9% [6.6%]). Counties with benchmark cuts above the 75th percentile had population-weighted average benchmark cuts of 14.9% compared with 4.4% in other counties. In the 8 years following the ACA, there was no differential change in MA enrollment between counties with larger vs smaller benchmark cuts (difference-in-differences estimate, 0.02 [95% CI, -1.18 to 1.21] percentage points; P = .98). Plan payments differentially fell in counties with larger benchmark cuts by $78.35 (95% CI, $62.21-$94.48) per member per month (P < .001).Conclusion and relevanceThis cohort study found no evidence that the MA benchmark and ensuing payment cuts imposed by the ACA were associated with reduced MA enrollment, compromising access to MA. This evidence can inform ongoing policy debates regarding the growth of MA, concerns about excess payments to MA plans, and proposed Medicare reforms, including further reductions in MA payments.

Project description:ImportanceMedicare Advantage (MA) has grown in popularity, but critics believe that insurers are overpaid, partially due to the quartile adjustment system that determines plan benchmarks. However, elimination of the quartile adjustments may be associated with less generous benefits and fewer plan offerings, which could slow MA enrollment growth.ObjectiveTo examine whether the quartile adjustment system is associated with differences in county-level benefits, insurer offerings, and MA enrollment.Design, setting, and participantsThe quartile adjustments create discontinuous jumps in county-level base payments based on historical traditional Medicare spending. Data from January 2017 to December 2021 and a regression discontinuity design were used to examine changes in insurer behavior and MA enrollment between quartiles. The analytic sample included 1557 county observations.Main outcomes and measuresStudy outcomes included monthly premiums, the share of plans charging premiums, primary care copayments, the share of plans using rebates to reduce Part B premiums, supplemental benefits, plan and contract availability, and MA enrollment.ResultsDiscontinuities were found in the quartile adjustments and benchmarks. A 1-percentage point (pp) increase in the quartile adjustment was associated with a $6.36 increase in monthly benchmarks (95% CI, 5.10-7.62), a $0.51 decrease in monthly premiums (95% CI, -0.96 to -0.07), and a 0.68 pp decrease in the share of plans charging premiums (95% CI, -1.25 to -0.10). Significant changes were not found in primary care copayments (-$0.04; 95% CI, -0.17 to 0.09), the share of plans using rebates to reduce Part B premiums (-0.17 pp; 95% CI, -0.34 to 0.01), supplemental benefits (eg, preventive dental coverage; 0.17 pp; 95% CI, -0.25 to 0.0), the number of plans (1.06; 95% CI, -3.44 to 5.57) or contracts (0.31; 95% CI, -0.18 to 0.81), or the MA enrollment rate (0.16 pp; 95% CI, -0.61 to 0.94).Conclusions and relevanceThe study results suggest that MA plans are not very sensitive to modest changes in payment rates. Modifications to the quartile adjustment system may generate savings without substantially affecting MA beneficiaries.

Dataset Information

Growing divergence between Medicare Advantage plan bids and payments to plans.

Publications

Growing divergence between Medicare Advantage plan bids and payments to plans.

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