Understanding the Medicare Advantage Program
Medicare Advantage (MA) plans offer beneficiaries a valuable alternative to Medicare fee-for-service (FFS). By providing out-of-pocket cost protections, offering additional benefits, and employing innovative strategies for care management and coordination, MA has led to lower costs and improved care across the Medicare program.
Over half of eligible Medicare beneficiaries (more than 30 million people) receive their benefits through an MA plan rather than traditional FFS. Though MA payments are, on average, equivalent to FFS costs, the manner in which MA plans are paid—via monthly capitated payments—differs significantly from FFS. The capitated model inherently incentivizes MA plans to keep enrollees healthy, prevent avoidable complications of disease, and prioritize value over volume of services.
MA plans’ efforts to improve care influence the way in which providers deliver care to all of their Medicare patients. These positive “spillover effects” have contributed to improvements in healthcare service use and, importantly, a slowdown in overall Medicare spending.
Related Public Policy Research
Medicare Advantage Supplemental Benefits Are Associated with Improved Health Quality
The use of Medicare Advantage (MA) supplemental benefits—in particular, food and transportation benefits—is associated with improved healthcare quality, especially in managing diabetes and cardiovascular conditions. This analysis of dual eligible special needs plan enrollees highlights the importance of maintaining flexibility in offering non-medical benefits to support complex health and social needs.
Medicare Advantage Growth Is Associated with Lower Total Medicare Spending
In the last decade, growth in Medicare program spending has been slower than projected, spurring questions about factors that contribute to this trend. This analysis suggests that Medicare Advantage (MA) enrollment, which has grown significantly in the same time frame, may be one such factor.
Medicare Advantage Supplemental Benefits and Improved Healthcare Use
Under the Medicare Advantage (MA) program, private plans can offer additional benefits not covered by traditional Medicare known as supplemental benefits. This paper examines the association between supplemental benefit use and healthcare utilization among non-dual eligible and dual eligible MA members.