Medicare Advantage plan enrollees have lower expenses than those with similar risk scores who remain in traditional Medicare, but payments to the program are based on traditional Medicare, according to a whitepaper from researchers at the University of Southern California in Los Angeles.
Because Medicare Advantage enrollees tend to have lower expenses, but the government pays MA plans based on an average risk profile for traditional Medicare enrollees, overpayments could be higher than previous estimates, according to the analysis.
The whitepaper, published June 13, compared enrollees with similar health risk scores. The researchers found that enrollees with low expenses relative to their risk score were more likely to switch to Medicare Advantage plans, while those with higher expenses were more likely to remain in fee-for-service Medicare.
Paul Ginsburg, PhD, senior fellow at the USC Schaeffer Center for Health Policy and Economics and an author of the whitepaper, said overpayments in Medicare Advantage are "markedly higher than previously understood."
The Medicare Payment and Advisory Commission estimates the federal government will overpay MA plans $27 billion in 2023. The researchers estimated this figure is $75 billion.
“Our analysis highlights how Medicare Advantage currently operates and the need to reform how the plans are paid," Dr. Ginsburg said in a June 13 news release.
Read the full analysis here.