In 2022, Medicare Advantage plans paid an estimated average of $2,350 for each enrollee over their estimates of costs for providing Medicare-covered services. This amount is called a rebate.
These payments from the federal government have contributed to growth in Medicare Advantage as well as overall program spending. CBO estimates that, between 2021 and 2032 the net Medicare expenditures (i.e., those after subtracting premiums and other offsetting receipts) will grow in proportion to the federal budget and the country’s economy.
In recent times, the average rate of rebate for MA plans has significantly increased. This is due to the fact that the majority of MA plans are in areas where benchmarks are high. For every dollar that differs between benchmarks, MA plan costs (including profits) and rebates are 32 cents and 52 cents more, respectively.
Costs for MA plans vary by region due to the fact that the Medicare Advantage program uses different benchmarks and reimbursement strategies for each of the service areas. It is not uncommon for the same MA plan to compete in multiple regions, with various benchmarks and payment methods.
The MA program also covers additional benefits not covered by Original Medicare, such as vision, hearing and dental services. These costs may vary based on plan, and so can monthly plan premiums, as well as out-of-pocket maximums. They can be impacted by restrictions on networks. In VBID MA plans innovate to meet the requirements of a person-centered approach by addressing the social determinants and enhancing the coordination of care.
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