Payment for Medicare Advantage Plans: Policy Issues and Options

Medicare Advantage (MA) is the current program under which beneficiaries can enroll in private health plans rather than having their care covered through Medicare's traditional fee for service (FFS) program. Payments to MA plans in many areas are now substantially greater than the cost of treating comparable beneficiaries in the traditional program. The higher payments have raised serious questions regarding Medicare's fiscal solvency, their net value to the program and their equity implications for beneficiaries. In this paper, we provide a detailed description of the MA program, describe the issues related to the MA payment debate, and analyze options that might be considered for modifying the current methods of determining MA payment amounts. [48 PDF pages]