His articles have appeared in the New England Journal of Medicine, Health Affairs, and other peer-reviewed journals.
These estimates assume no changes to projected enrollment, which may occur if supplemental benefits, cost sharing, or other features of Medicare Advantage plans change in response to lower payments from the federal government. MedPACs most recent analysis of the relationship between Medicare Advantage payments and spending in traditional Medicare suggests that the difference has widened, with 2021 payments per Medicare Advantage enrollee estimated to total 104 percent of spending in traditional Medicare. In 2021, 81 percent of Medicare Advantage enrollees are in plans that receive a bonus payment. However, since 2017, benchmarks have risen on average, which increases the maximum possible payment a plan can receive.
Across the approximately 22 million people enrolled in Medicare Advantage in 2019, higher spending of $321 per person led to about $7 billion in additional spending in that year.
excess payments, not managed care efficiencies, that enable plans to attract beneficiaries by offering a benefit package that is more comprehensive than the one available to FFS beneficiaries, while charging modest or no premiums. Ahead of Fridays announcement of Medicares preliminary payment rates and policies for Medicare Advantage insurers in 2016, insurers have launched an advertising campaign claiming that potential payment changes would undermine the program. For numerous reasons, its hard to take these doom-and-gloom predictions seriously. Despite Medicare Advantages ability to deliver care more efficiently, the Medicare program pays more for Medicare Advantage enrollees than it does for similar beneficiaries enrolled in traditional Medicare. Rebates must be used to reduce cost sharing, subsidize the standard Part B and/or Part D premium, or pay for supplemental benefits (such as vision, dental, and hearing). The Health and Human Services Office of the Inspector General is currently conducting a targeted review of documentation submitted by Medicare Advantage organizations to determine whether diagnoses and associated risk scores comply with federal regulations.
There is clear evidence that the Medicare program overpays Medicare Advantage plans in part as aresult of plans coding intensity that is, aggressively coding enrollees diagnoses to produce higher risk scores and generate higher payments toplans. Medicare spending for Medicare Advantage enrollees was $321 higher per person in 2019 than if enrollees had instead been covered by traditional Medicare. While traditional Medicare spending is used to establish benchmarks, actual payments to Medicare Advantage plans can be higher or lower than spending for comparable beneficiaries in traditional Medicare. We build on prior work published by the Medicare Payment Advisory Commission (MedPAC) and the Centers for Medicare and Medicaid Services (CMS) Office of the Actuary (OACT) to provide estimates of the amount Medicare would have spent for Medicare Advantage enrollees had they been covered under traditional Medicare in 2019 (the most recent year for which data are available). The addition of all those codes greatly improved the accuracy of the risk adjuster. In the same year, federal payments to Medicare Advantage plans were $11,844 per enrollee, or $321 more per person than Medicare would have spent if these beneficiaries had instead been covered by traditional Medicare. Note that the phrase fee-for-service (FFS) refers to the traditional Medicare program in which doctors and hospitals are paid a fee only after they render a service. To adjust to such a cap, plans could find additional efficiencies in the coverage of Part A and B services, reduce supplemental benefits, restrict the future growth in supplemental benefits, lower administrative costs, reduce profits, or some combination of each. Applying this payment reduction to the projected Medicare Advantage payments per enrollee in each year between 2022 and 2029, total Medicare Advantage spending would be $82 billion lower through 2029 (Figure 2).
About 28 million Medicare beneficiaries43 percent of those eligible for Medicareare enrolled in aMedicare Advantage plan, and this number is projected to reach 50 percent by 2025. If Medicare Advantage spending per person was 2 percent less a year than projected, similar to the simulated effect of recommended payment changes from MedPAC, total Medicare spending would be $82 billion lower through 2029. If instead Medicare payments per Medicare Advantage enrollee grew at the same rate as is projected for spending per person in traditional Medicare (4.4% vs 5.3%), total Medicare spending would be $183 billion lower between 2021 and 2029. Rebates are projected to grow nearly 8 percent a year on average, which the actuaries attribute to assumed increases in quality bonus payments and increases in benchmarks..
For example, under the quality bonus program, payments from the federal government to Medicare Advantage plans will total $11.6 billion in 2021, at least a portion of which was paid as the rebate. He was a member of Gov. Opens in a new window. MedPAC estimates that roughly 60 percent of that differential reflects the phenomenon known as upcoding the first time MedPAC analysts have quantified how much upcoding inflates Medicare Advantage payments. The decrease is approximately 1 percent of total Medicare benefit spending over these years (and 2 percent of Medicare Advantage spending). Comparing the two alternative scenarios, the reduction in Medicare Advantage spending is similar in the initial years of the time period. The benchmarks are subject to caps, meaning they cannot exceed the benchmarks that were in place before the Affordable Care Act. Though beneficiaries with ESRD have substantially higher costs than the average Medicare beneficiary, they represent less than 1 percent of all Medicare beneficiaries, and so increased enrollment by beneficiaries with ESRD is likely to explain a relatively small portion of the growth in per-person spending in Medicare Advantage. The payments to plans are risk adjusted, based on the health status and other characteristics of enrollees, including age, sex, and Medicaid enrollment. The higher Medicare spending per Medicare Advantage enrollee, compared to spending for similar beneficiaries under traditional Medicare, contributed an estimated $7 billion in additional spending in 2019. This allowed the plans to continue to provide similar levels of supplemental benefits. CMS proposed last year to exclude any diagnoses identified during an in-home assessment that subsequent clinical encounters fail to confirm. CMS, however, dropped the proposal in the face of industry opposition, opting to collect additional data about the impact of these assessments and revisit the issue later. We welcome the submission of manuscripts and letters for possible publication.
Reduced federal payments could mean Medicare Advantage enrollees see fewer extra benefits and higher cost sharing and premiums compared to today (but still lower costs than compared to traditional Medicare without supplemental coverage), but plans could also reduce profits or administrative costs to make up the difference. ,
MedPAC has proposed changes to how Medicare Advantage benchmarks are calculated and estimate these changes would result in a 2 percent reduction in Medicare Advantage payments in a single year.
In the quartile of counties with the lowest traditional Medicare spending per person, MedPAC estimates an average of 5 plan sponsors would offer 12 different plans (compared to 6 plans sponsors who offered 22 different plans in 2020). . Although taking steps to address the fiscal challenges facing Medicare are not front and center in current Medicare policy discussions, policymakers may soon be on the lookout for options to achieve Medicare savings to fund other spending priorities or extend the solvency of the Medicare HI Trust Fund.
Further, despite predictions by CBO, Medicare actuaries, and others that enrollment in Medicare Advantage would fall following the reductions in payment to Medicare Advantage plans enacted as part of the Affordable Care Act, enrollment never declined and has instead risen rapidly.
The Henry J. Kaiser Family Foundation Headquarters: 185 Berry St., Suite 2000, San Francisco, CA 94107 | Phone 650-854-9400
This allows us to calculate per-person spending for beneficiaries in traditional Medicare on a basis comparable to federal payments per enrollee in Medicare Advantage. Tricia Neuman
Either response increases the payment Medicare Advantage plans receive as benchmarks increase.
For example, the number of Medicare Advantage enrollees in special needs plans (SNPs), which included just over half of all dually eligible beneficiaries in Medicare Advantage in 2019, is expected to increase slightly by 2029. All Rights Reserved. While this approach is not directly pegged to a specific policy proposal, it illustrates the potential for savings, of, for example, a cap on the growth in total Medicare Advantage payments per enrollee. Rebates account for about 10 percent of Medicare Advantage payments in 2021 ($35 billion of $348 billion) and are projected to rise to 12 percent ($80 billion of $664 billion) in 2029.
This work was supported in part by Arnold Ventures. In response to CMS request for comments on the Calendar Year (CY) 2023 Medicare Advantage and Part DAdvance Notice, Arnold Ventures outlined its support for CMS to increase the coding intensity factor beyond the minimum adjustment required by statue to more appropriately account for diagnostic coding intensity in Medicare Advantage plans. To return to our United Healthcare example, now CMS can reduce UHCs overpayment by 12% from $1,000 to $880. Higher and Faster Growing Spending Per Medicare Advantage Enrollee Adds to, increase in Medicare Advantage enrollment, increased 14 percent between 2020 and 2021, Payments to Medicare Advantage Plans Boosted Medicare Spending by $7 Billion in 2019, Medicare Advantage in 2021: Enrollment Update and Key Trends, Medicare Advantage in 2021: Star Ratings and Bonuses, FAQs on Medicare Financing and Trust Fund Solvency, Options to Make Medicare More Affordable For Beneficiaries Amid the COVID-19 Pandemic and Beyond. However, while it is not possible to know exactly how plans will respond to lower payments, previous analyses of past payment changes demonstrate that plans have found savings elsewhere in order to maintain rebate dollars to fund supplemental benefits that may appeal to enrollees.
These estimates assume no changes to projected enrollment, which may occur if supplemental benefits, cost sharing, or other features of Medicare Advantage plans change in response to lower payments from the federal government. MedPACs most recent analysis of the relationship between Medicare Advantage payments and spending in traditional Medicare suggests that the difference has widened, with 2021 payments per Medicare Advantage enrollee estimated to total 104 percent of spending in traditional Medicare. In 2021, 81 percent of Medicare Advantage enrollees are in plans that receive a bonus payment. However, since 2017, benchmarks have risen on average, which increases the maximum possible payment a plan can receive.
Across the approximately 22 million people enrolled in Medicare Advantage in 2019, higher spending of $321 per person led to about $7 billion in additional spending in that year.
excess payments, not managed care efficiencies, that enable plans to attract beneficiaries by offering a benefit package that is more comprehensive than the one available to FFS beneficiaries, while charging modest or no premiums. Ahead of Fridays announcement of Medicares preliminary payment rates and policies for Medicare Advantage insurers in 2016, insurers have launched an advertising campaign claiming that potential payment changes would undermine the program. For numerous reasons, its hard to take these doom-and-gloom predictions seriously. Despite Medicare Advantages ability to deliver care more efficiently, the Medicare program pays more for Medicare Advantage enrollees than it does for similar beneficiaries enrolled in traditional Medicare. Rebates must be used to reduce cost sharing, subsidize the standard Part B and/or Part D premium, or pay for supplemental benefits (such as vision, dental, and hearing). The Health and Human Services Office of the Inspector General is currently conducting a targeted review of documentation submitted by Medicare Advantage organizations to determine whether diagnoses and associated risk scores comply with federal regulations.
There is clear evidence that the Medicare program overpays Medicare Advantage plans in part as aresult of plans coding intensity that is, aggressively coding enrollees diagnoses to produce higher risk scores and generate higher payments toplans. Medicare spending for Medicare Advantage enrollees was $321 higher per person in 2019 than if enrollees had instead been covered by traditional Medicare. While traditional Medicare spending is used to establish benchmarks, actual payments to Medicare Advantage plans can be higher or lower than spending for comparable beneficiaries in traditional Medicare. We build on prior work published by the Medicare Payment Advisory Commission (MedPAC) and the Centers for Medicare and Medicaid Services (CMS) Office of the Actuary (OACT) to provide estimates of the amount Medicare would have spent for Medicare Advantage enrollees had they been covered under traditional Medicare in 2019 (the most recent year for which data are available). The addition of all those codes greatly improved the accuracy of the risk adjuster. In the same year, federal payments to Medicare Advantage plans were $11,844 per enrollee, or $321 more per person than Medicare would have spent if these beneficiaries had instead been covered by traditional Medicare. Note that the phrase fee-for-service (FFS) refers to the traditional Medicare program in which doctors and hospitals are paid a fee only after they render a service. To adjust to such a cap, plans could find additional efficiencies in the coverage of Part A and B services, reduce supplemental benefits, restrict the future growth in supplemental benefits, lower administrative costs, reduce profits, or some combination of each. Applying this payment reduction to the projected Medicare Advantage payments per enrollee in each year between 2022 and 2029, total Medicare Advantage spending would be $82 billion lower through 2029 (Figure 2).
About 28 million Medicare beneficiaries43 percent of those eligible for Medicareare enrolled in aMedicare Advantage plan, and this number is projected to reach 50 percent by 2025. If Medicare Advantage spending per person was 2 percent less a year than projected, similar to the simulated effect of recommended payment changes from MedPAC, total Medicare spending would be $82 billion lower through 2029. If instead Medicare payments per Medicare Advantage enrollee grew at the same rate as is projected for spending per person in traditional Medicare (4.4% vs 5.3%), total Medicare spending would be $183 billion lower between 2021 and 2029. Rebates are projected to grow nearly 8 percent a year on average, which the actuaries attribute to assumed increases in quality bonus payments and increases in benchmarks..
For example, under the quality bonus program, payments from the federal government to Medicare Advantage plans will total $11.6 billion in 2021, at least a portion of which was paid as the rebate. He was a member of Gov. Opens in a new window. MedPAC estimates that roughly 60 percent of that differential reflects the phenomenon known as upcoding the first time MedPAC analysts have quantified how much upcoding inflates Medicare Advantage payments. The decrease is approximately 1 percent of total Medicare benefit spending over these years (and 2 percent of Medicare Advantage spending). Comparing the two alternative scenarios, the reduction in Medicare Advantage spending is similar in the initial years of the time period. The benchmarks are subject to caps, meaning they cannot exceed the benchmarks that were in place before the Affordable Care Act. Though beneficiaries with ESRD have substantially higher costs than the average Medicare beneficiary, they represent less than 1 percent of all Medicare beneficiaries, and so increased enrollment by beneficiaries with ESRD is likely to explain a relatively small portion of the growth in per-person spending in Medicare Advantage. The payments to plans are risk adjusted, based on the health status and other characteristics of enrollees, including age, sex, and Medicaid enrollment. The higher Medicare spending per Medicare Advantage enrollee, compared to spending for similar beneficiaries under traditional Medicare, contributed an estimated $7 billion in additional spending in 2019. This allowed the plans to continue to provide similar levels of supplemental benefits. CMS proposed last year to exclude any diagnoses identified during an in-home assessment that subsequent clinical encounters fail to confirm. CMS, however, dropped the proposal in the face of industry opposition, opting to collect additional data about the impact of these assessments and revisit the issue later. We welcome the submission of manuscripts and letters for possible publication.
Reduced federal payments could mean Medicare Advantage enrollees see fewer extra benefits and higher cost sharing and premiums compared to today (but still lower costs than compared to traditional Medicare without supplemental coverage), but plans could also reduce profits or administrative costs to make up the difference. ,
MedPAC has proposed changes to how Medicare Advantage benchmarks are calculated and estimate these changes would result in a 2 percent reduction in Medicare Advantage payments in a single year.
In the quartile of counties with the lowest traditional Medicare spending per person, MedPAC estimates an average of 5 plan sponsors would offer 12 different plans (compared to 6 plans sponsors who offered 22 different plans in 2020). . Although taking steps to address the fiscal challenges facing Medicare are not front and center in current Medicare policy discussions, policymakers may soon be on the lookout for options to achieve Medicare savings to fund other spending priorities or extend the solvency of the Medicare HI Trust Fund.
Further, despite predictions by CBO, Medicare actuaries, and others that enrollment in Medicare Advantage would fall following the reductions in payment to Medicare Advantage plans enacted as part of the Affordable Care Act, enrollment never declined and has instead risen rapidly.
The Henry J. Kaiser Family Foundation Headquarters: 185 Berry St., Suite 2000, San Francisco, CA 94107 | Phone 650-854-9400
This allows us to calculate per-person spending for beneficiaries in traditional Medicare on a basis comparable to federal payments per enrollee in Medicare Advantage. Tricia Neuman
Either response increases the payment Medicare Advantage plans receive as benchmarks increase.
For example, the number of Medicare Advantage enrollees in special needs plans (SNPs), which included just over half of all dually eligible beneficiaries in Medicare Advantage in 2019, is expected to increase slightly by 2029. All Rights Reserved. While this approach is not directly pegged to a specific policy proposal, it illustrates the potential for savings, of, for example, a cap on the growth in total Medicare Advantage payments per enrollee. Rebates account for about 10 percent of Medicare Advantage payments in 2021 ($35 billion of $348 billion) and are projected to rise to 12 percent ($80 billion of $664 billion) in 2029.
This work was supported in part by Arnold Ventures. In response to CMS request for comments on the Calendar Year (CY) 2023 Medicare Advantage and Part DAdvance Notice, Arnold Ventures outlined its support for CMS to increase the coding intensity factor beyond the minimum adjustment required by statue to more appropriately account for diagnostic coding intensity in Medicare Advantage plans. To return to our United Healthcare example, now CMS can reduce UHCs overpayment by 12% from $1,000 to $880. Higher and Faster Growing Spending Per Medicare Advantage Enrollee Adds to, increase in Medicare Advantage enrollment, increased 14 percent between 2020 and 2021, Payments to Medicare Advantage Plans Boosted Medicare Spending by $7 Billion in 2019, Medicare Advantage in 2021: Enrollment Update and Key Trends, Medicare Advantage in 2021: Star Ratings and Bonuses, FAQs on Medicare Financing and Trust Fund Solvency, Options to Make Medicare More Affordable For Beneficiaries Amid the COVID-19 Pandemic and Beyond. However, while it is not possible to know exactly how plans will respond to lower payments, previous analyses of past payment changes demonstrate that plans have found savings elsewhere in order to maintain rebate dollars to fund supplemental benefits that may appeal to enrollees.