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MedPAC Reiterates Position that MA Plans Cost More, Responds to Criticism

The longstanding position of the Medicare Payment Advisory Commission (MedPAC) is that Medicare spends more overall for enrollees in Medicare Advantage (MA) than the program would have spent for similar beneficiaries enrolled in traditional fee-for-service Medicare (Original Medicare). MedPAC has a statutory mandate to issue an annual report to Congress that examines all of Medicare’s payment policies, including an assessment of the MA program. They recently reiterated their position regarding MA and have garnered some pushback from the insurance industry.

In response to criticism, MedPAC said the primary focus must be the relative costs of covering a beneficiary in each of the programs and must account for varied health status (MA enrollees tend to be healthier than those in original Medicare), geographic distribution, spending for hospice (Original Medicare covers all hospice care, even for MA enrollees) and graduate Medical Education (paying teaching hospitals), and differences in coding intensity (upcoding).

MedPAC is clear, however, that they are not implying that MA is inefficient. They simply highlight that “it is essential that Medicare pay plans appropriately so that the Medicare program and taxpayers can share in the greater efficiency in care delivery associated with MA plans.”

At Medicare Rights, we support MedPAC’s efforts to underscore MA payment and incentives and urge both the Biden administration and Congress to pay close attention to overpayments that burden the system.

See the MedPAC presentation on MA payment.

Read the MedPAC response to industry criticism.

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