Health Policy Commons^™

Paying Medicare Private Plans By Competitive Bidding: Not The Same As Costs In Regular Medicare, Brian Biles, Jonah Pozen

Health Policy and Management Faculty Publications

Medicare Advantage plans are now paid $11 billion a year, and $150 billion over 10 years, more than costs in regular fee-for-service (FFS) Medicare. In the past two years there have been discussions about reducing MA payments to the level of 100 percent of average costs in FFS and using the savings to offset the costs of new Federal health initiatives such as health care reform. Earlier this year, OMB proposed "reducing Medicare overpayments to private insurers through competitive payments." Under this proposal, MA plan "payments would be based on an average of plans' bids submitted to Medicare." This issue …