Lowering Medicare Advantage Overpayments From Favorable Selection By Reforming Risk Adjustment

Health Affairs July 13, 2023
Steven M. Lieberman, Paul B. Ginsburg, Eugene Lin

Persistent favorable selection to Medicare Advantage (MA) generates large annual overpayments because beneficiaries who switch to MA systematically use fewer medical services than those who remain in traditional fee-for-service (FFS) Medicare even after risk adjustment. Our findings that favorable selection overpays MA plans by 14.4 percent are reinforced by the recent Medicare Payment Advisory Commission (MedPAC) report estimating overpayments of 11 percent from favorable selection.

A recent Health Affairs Forefront article from two of us (Ginsburg and Lieberman) explored broad policy directions that would reduce MA overpayments from favorable selection. In this article, we flesh out one of these directions: reforming the current administered payment approaches linking spending in FFS to MA rates. We outline short-term, intermediate-term, and longer-term approaches...

Today's Sponsors

Today's Sponsor