Reducing Medicare Advantage benchmark payments will slightly reduce benefits, study finds

Reduced Medicare Advantage benchmark payments would likely have a small effect on premiums, cost-sharing and benefits offered by MA plans, a study published March 22 in Health Affairs found. 

Researchers analyzed the effects of Medicare Advantage payments from 2012 to 2019 on premiums and benefits plans offered. 

Benchmark payments are the base dollar amounts set by CMS, which MA plans bid against to determine premiums and fund extra benefits. Plans receive rebate funding based on the benchmark amount. 

The study was authored by Michael Chernew, PhD, chair of the Medicare Payment Advisory Commission and the Leonard D. Schaeffer Professor of Health Care Policy at Boston-based Harvard Medical School, and researchers at  Eugene-based University of Oregon, Minneapolis-based University of Minnesota, and Austin-based University of Texas. 

As rebates grew, average annual premiums dropped from $527 in 2012 to $265 in 2019, and deductibles decreased from $139 to $24. More plans also offered supplemental benefits, including transportation, comprehensive dental benefits and gym memberships. 

Based on these results, the study's authors estimate a $1,000 decrease in benchmark payments would lead to a $60 increase in average annual premiums and an increase of $27 in average deductibles. Additionally, plans' ability to offer supplemental benefits would decline by around 5 percent, the authors estimate, with the greatest impact on dental, vision and hearing coverage. 

Read more here. 

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