MA Plans Pay for Medical Services
In 2022, Medicare Advantage Plans paid an average of $2.350 per enrollee in excess of their estimates of costs to provide Medicare-covered services. This amount is referred to as a rebate.
These payments from the federal government have aided in driving growth in Medicare Advantage and overall program spending. CBO predicts that between 2021 and 2032, net Medicare expenses (i.e. the ones after subtracting the premiums and other offset receipts) will rise as a percentage of the federal budget as well as the nation’s GDP.
The average MA plan rebate has grown significantly in recent years. This is due in large part to the fact the majority of MA plans are located in areas with high benchmarks. For every dollar difference in benchmarks, MA plan costs (including profits) and rebates are 52 cents and 32 cents more, respectively.
The Medicare Advantage program uses different benchmarks, reimbursement methods, and regions of service for each. For this reason, it is common for the same plan to compete with other MA plans in different regions using different reimbursement methods and benchmarks.
The MA program also covers additional benefits that are not covered by Original Medicare, such as hearing, vision and dental services. The monthly premiums, out-of-pocket limits and costs of plans could differ. These costs may be impacted by network restrictions. In VBID, MA plans are innovating to meet person-centered needs by dealing with the social determinants of health and enhancing coordination of care.
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