Commonwealth Fund December 21, 2017
Toplines
The way Medicare Advantage pays participating health plans to provide Medicare benefits doesn’t incentivize insurers to minimize their costs
Medicare Advantage plans would be more efficient in providing benefits to enrollees if insurers’ competitive incentives were stronger
Abstract
- Issue:Medicare Advantage (MA), the program that allows people to receive their Medicare benefits through private health plans, uses a benchmark-and-bidding system to induce plans to provide benefits at lower costs. However, prior research suggests medical costs, profits, and other plan costs are not as low under this system as they might otherwise be.
- Goal:To examine how well the current system encourages MA plans to bid their lowest cost by examining the relationship between costs and bonuses (rebates) and the benchmarks...
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