Health Affairs February 10, 2025
Most Medicare beneficiaries now receive their benefits through a Medicare Advantage (MA) plan. In 2023, total payments from the Centers for Medicare and Medicaid Services (CMS) to MA plans were $460 billion; by 2032, payments could reach nearly $1 trillion. Given these expenditures and profits for MA plans, scrutiny over the MA program has intensified.
The Medicare Payment Advisory Commission (MedPAC) estimates that in 2024 CMS will pay MA plans $83 billion (22 percent) more than it would pay for comparable Medicare beneficiaries enrolled in Traditional Medicare (TM). This overpayment is due to two sources: $49 billion (59 percent of overpayment) from coding behavior and $34 billion (41 percent) from favorable selection.
Coding behavior impacts payments because CMS pays MA...
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