Medicare Advantage quality bonus payments will be at least $11.8 billion in 2024, according to an analysis released September 11 by research institution KFF.
These bonus payments, established by the Affordable Care Act, are distributed to insurance plans that receive a high rating for the prior year based on a five-star system, Jeannie Fuglesten Biniek, one of the report’s authors and associate director of the Medicare policy program at KFF, told Healthcare Brew.
The biggest winners of this year’s bonuses were insurance giants with large shares of the Medicare Advantage market: UnitedHealthcare’s Medicare Advantage plans got the most in bonuses, at about $3.4 billion, followed by Humana, which got $2.5 billion, and Blue Cross Blue Shield, which received $1.7 billion. Together, these top three companies got 64% of the total.
But the most important takeaway from this year’s projected numbers, Fuglesten Biniek said, is how much these payments have grown since the program began in 2012.
“It’s not large in the context of the Medicare program, but it is still a substantial amount of money, and it’s increasing,” Fuglesten Biniek said.
This year’s total payouts are a 400+% jump from bonuses back in 2015, when plans got $3 billion total. The projected 2024 payout would be beaten only by last year’s $12.8 billion, which Fuglesten Biniek said was likely that high because the Centers for Medicare and Medicaid Services’s (CMS) emergency provisions “artificially bolstered” star ratings for some plans during the pandemic, thereby inflating 2023 bonuses.
How they did it. KFF calculated the projected bonuses for plans based on their star ratings and the CMS annual rate book, which shares the maximum amounts Medicare will pay Advantage plans by county.
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CMS also adjusts its payouts based on expected enrollee healthcare costs, known as a risk score. KFF’s estimate, however, doesn’t include that information, Fuglesten Biniek added.
Though CMS does eventually share Medicare Advantage plan payment data with the public, it lags. The most recent data posted is from 2021.
The big picture. Now, the 11.8 billion-dollar question is whether these bonus payments are actually making a difference for consumers.
The answer? We don’t know, Fuglesten Biniek said.
“We don’t have the data right now. And this is sort of a broader issue with Medicare Advantage, data transparency” she said.
Fuglesten Biniek co-authored a separate analysis in April that argued CMS does not collect or publicize data researchers need to answer crucial questions about certain issues, such as the use of supplemental benefits and prior authorization.
There’s another area that needs more research. KFF’s September analysis found that special needs plans designed for people with disabilities or people who have been institutionalized—which have a larger share of Black and Hispanic beneficiaries—received “relatively low” bonus payments compared to employer-sponsored plans with higher-income, primarily white enrollees.
Special needs plans averaged a $330 bonus payment per enrollee, whereas union- and employer-sponsored Medicare Advantage plans averaged $456.
“That just raises questions about the implications for equity and what the plans are able to provide,” Fuglesten Biniek said. “I think there’s more work to be done to really understand.”