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

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.

© 2024 MMIT
Lauren Flynn Kelly

Lauren Flynn Kelly Managing Editor, Radar on Medicare Advantage

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.

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