‘Fundamental lack of transparency’ plagues $86B Medicare Advantage expense 

The federal government will spend an estimated $86 billion on Medicare Advantage supplemental benefits in 2025, according to a report from the Medicare Payment and Advisory Commission. 

MedPAC, which advises the federal government on Medicare policy, published the report to Congress June 12. 

According to the report, Medicare will pay MA plans around $2,530 in rebates per enrollee for supplemental benefits in 2025, accounting for around 17% of total payments to MA plans. In 2018, MA plans paid around $1,160 per enrollee for supplemental benefits. 

Supplemental benefits include services not covered by traditional Medicare, including vision, hearing and dental care. 

Here are five things to know: 

1. According to 2025 bids submitted by MA plans, insurers expect to use around $39 billion of the $86 million to provide non-Medicare services, and $27 billion to reduce cost sharing. Though plans provide projections, there is little data about how these dollars are actually spent, according to MedPAC.
   
   
2. Special needs plans, which cover beneficiaries dually eligible for Medicare and Medicaid, allocate most supplemental benefit funding to non-Medicare benefits. SNP plans intend to spend more dollars on non-Medicare services than dental, vision, hearing and transportation benefits combined.
   
   
3. Data related to supplemental benefit use is limited, according to MedPAC. New regulations implemented in 2024 will resolve some of these limitations, the commission wrote, but this data will not be available for several years.
   
   
4. Medicare Advantage organizations often administer supplemental benefits through vertically integrated entities, according to MedPAC. The commission found “several instances” where benefits were structured to be provided exclusively by providers owned by the plan’s parent organization.
   
   
5. The commission found a “fundamental lack of transparency” about how enrollees use supplemental benefits, and how much these benefits cost. Better information could lead to more robust policy recommendations in the future, the committee wrote. 

Read the full report here.