Study: Quartile System Used to Adjust MA Plan Pay Led to $46.7B in Extra Payments

  • Dec 21, 2023

    While lawmakers continue to point fingers at risk adjustment and coding practices in Medicare Advantage for increasing plan payments relative to traditional fee-for-service (FFS) Medicare, a new analysis published in JAMA puts a spotlight on the “intended payment differences” created by the quartile structure currently used to set MA payment benchmarks. The Medicare Payment Advisory Commission (MedPAC) has previously recommended replacing the four-tiered system and “rebalancing” MA pay. Researchers now estimate that this system has generated an additional $46.7 billion in additional payments to MA plans, which could fuel the desire of progressive lawmakers to overhaul how MA plans are paid.

    Established by the Affordable Care Act, the quartile system pays plans more for serving counties with the lowest FFS spending by applying a statutorily determined percentage to the per capita FFS estimates of spending for each county. The adjustments range from 95% for the highest-spending counties to 115% for the lowest-spending counties. Benchmarks are calculated before plans submit their bids and are also adjusted based on a plan’s Star Rating.

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  • Lauren Flynn Kelly

    Lauren has been covering health business issues since the early 2000s and specializes in in-depth reporting on Medicare Advantage, managed Medicaid and Medicare Part D. She also possesses a deep understanding of the complex world of pharmacy benefit management, having written AIS Health’s Radar on Drug Benefits from 2004 to 2005 and again from 2011 to 2016. In addition to her role as managing editor of Radar on Medicare Advantage, she oversees AIS Health’s publications and manages the health editorial staff. She graduated from Vassar College with a B.A. in English.

    Carina Belles

    Carina has been covering public-sector health care since 2018. As a data reporter for Radar on Medicare Advantage, she creates infographics and data stories on issues impacting Medicare, Medicaid and Part D. She also develops AIS Health Daily, a free daily newsletter that showcases AIS’s strong reporting across our four publications and parent company Norstella’s suite of market access and data solutions. Prior to joining the editorial team, she managed Medicare and Medicaid data for the Directory of Health Plans, AIS’s industry-standard health coverage database. She graduated from Ohio University with a B.S. in Journalism.

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