Will Medicare Advantage payment reforms impact plan rebates and enrollment?

OBJECTIVES

To assess the relationship between Medicare Advantage (MA) plan rebates and enrollment and simulate the effects of Affordable Care Act (ACA) payment reforms.

STUDY DESIGN AND METHODS

First difference regressions of county-level MA payment and enrollment data from CMS from 2006 to 2010.

RESULTS

A $10 decrease in the per member/per month rebate to MA plans was associated with a 0.20 percentage point (0.9%) decrease in MA penetration (P < .001) and a 7.1% decline in the average MA enrollee's risk score (P < .001). These effects are small overall, but larger in counties with low levels of traditional Medicare spending; a $10 decrease in monthly rebates was associated with a 0.64 percentage point decline in MA penetration and a 10% decrease in risk score. ACA reforms are predicted to reduce the level of rebates in lower-spending counties, leading to enrollment decreases of 1.7 to 1.9 percentage points in the lowest-spending counties. The simulation predicts that the disenrollment would come from MA enrollees with higher risk scores.

CONCLUSIONS

MA enrollment responds to availability of supplemental benefits supported by rebates. ACA provisions designed to lower MA spending will predominantly affect Medicare beneficiaries living in counties where MA plans may be unable to offer a comparable product at a price similar to that of traditional Medicare.