Enrollment in Medicare Advantage plans has increased rapidly in recent years. The share of eligible Medicare beneficiaries enrolled in MA rose from 25% in 2010 to 47% in 2021 (27.6 million enrollees). Payments to MA plans more than doubled between 2015 and 2021 (from $175 to $361 billion), taking the share of total Medicare Parts A & B spending on MA from 38% to 54%. Over the next 10 years, CMS is expected to pay MA health insurance companies over $7 trillion. Evidence suggests that federal spending per person in MA exceeds spending for comparable FFS Medicare beneficiaries, with estimates ranging from 4 to 10 percent higher spending in MA in 2021. This differential is projected to grow over time, in large part from differences in diagnostic coding intensity – the number and type of diagnosis codes submitted by plans, which can increase federal payment due to MA risk adjustment practices. In recent years, margins are higher in MA than other markets, while enrollment in MA has continued to increase and the number of MA plans available to Medicare beneficiaries has grown significantly.
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