Commonwealth Fund February 17, 2022
Background
Since the inception of the Medicare Advantage program, the level and structure of payment to plans have been the subject of considerable debate. Does the government’s complex method of paying plans encourage competition or thwart it? Is it producing benefits for taxpayers or just plans themselves? And does it favor some Medicare beneficiaries at the expense of others?
Here’s how the system works. Every year, Medicare Advantage plans submit bids to cover a defined set of benefits — the same ones a beneficiary in the traditional Medicare program receives — for a person of average health in a given county. The bids are compared to a benchmark that’s pegged to projected spending in Medicare’s traditional fee-for-service (FFS) program in...
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