MedPAC supports changes to the development of MA plan payment benchmarks

“The Medicare Payment Advisory Commission [..] was largely in favor of creating a new payment approach that calculates MA [Medicare Advantage] payments based on a blend of local and national spending as opposed to the current methodology, which sets benchmarks on a county-by-county basis.

[..] the meeting underscored the panel’s desire to make reforms to the MA payment structure. MedPAC data show that MA plan payments are on average 2% higher than traditional Medicare.

[..] MA plans submit a bid that details the estimated revenue the plan will need to cover the basic Medicare benefit in Parts A and B. That bid is compared against a benchmark, which is based on the fee-for-service spending in the counties in the plan’s area. That benchmark can be increased if the plan quality reaches a certain level.

But the system has created benchmark “cliffs” in certain counties where a $1 difference in fee-for-service spending between counties could result in a $54 difference in the benchmark, a MedPAC staff report said.

If the benchmark is greater than the bid, which is usually the case, then the plan gets a base payment plus a rebate to make up the difference.

MedPAC staff reported that the current system hasn’t yielded “aggregate savings to Medicare.” Commission staff recommended a new benchmark that would include both local area and national historic healthcare spending.

[..] MedPAC’s report to Congress in June highlighted that MA has the potential to help address the growth in Medicare spending. MA plans have also grown in popularity in recent years despite payment reductions imposed by the Affordable Care Act, MedPAC found.

[MedPAC staffer Luis] Serna also noted that a change to the benchmarks could be applied more quickly than a larger payment overhaul.”

Full article, King R Fierce Healthcare 2020.10.2