Problems With CMS’s Per Capita Cost Measure Push Down Medicare Advantage Rates And Create Geographic Inequities

Health Affairs January 25, 2018
Jack Ashby and Paul Young

While enrollment in the Medicare Advantage (MA) program has grownsteadily across the United States, MA enrollees in some counties and states are paying more than they should in premiums because enrollment growth has aggravated a distortion in the benchmarks that govern the Centers for Medicare and Medicaid Services’ (CMS’s) payment to MA health plans. CMS’s methods can be corrected to bring more financial fairness to MA enrollees.

CMS’s method for setting county-level benchmarks considers several factors, but the rates are based primarily on Medicare’s average per capita cost for each county’s fee-for-service beneficiaries, adjusted for risk. This approach captures the effects of geographic variation in input prices, provider efficiency, and beneficiary health status. However, for health plans to meet this...

Today's Sponsors

Today's Sponsor