Table 1 shows that the transition to FFS-based rates under the Affordable Care Act, which began in 2012 and is scheduled to end in 2017, has already begun to reduce payments to MA plans relative to fee-for-service Medicare. Moreover, MA plan bids have declined from slightly higher (101 to 102 percent) to slightly less (96 to 98 percent) than fee-for-service costs in the last few years. This decline suggests that plans are adjusting to the new payment incentives by becoming more efficient.23
Medicare Advantage (MA) Benchmarks, Bids, and Program Payments as a Percentage of Fee-For-Service Expenditures, 2006-2014 (1)
|Year||MA Benchmarks as a % of FFS Expenditures (includes local and regional benchmarks)||MA Bids as a % of FFS Expenditures (represents bids for Medicare Part A and Part B benefits)||MA Program Payments as a % of FFS Expenditures (bids plus rebates)|
23 For example, MedPAC has stated that “The pressure of competitive bidding has led to either improved efficiency or lower margins that enable MA plans to continue to increase MA enrollment by offering benefit packages that beneficiaries find attractive.” Medicare Payment Advisory Commission, “The Medicare Advantage Program: Status Report,” Chapter 13, Report to the Congress: Medicare Payment Policy, March 2014.