Medicare Advantage Organizations Reap Ever Larger Bonuses

Many Medicare Advantage (MA) plans will get a funding bump after the Centers for Medicare & Medicaid Services (CMS) recalculated payments under the MA Quality Bonus Program (QBP). The move from CMS comes after a court determined that the agency originally used improper measures to calculate the ratings.

Flawed MA Payment Methodologies

MA payment methodologies are a complex web that results in massive overpayments to MA plans. The QBP is one driver of these overpayments. It requires CMS to rate plans in every county on a five-star system. Plans that score at least 4 stars get a bonus payment. In some counties, plans can get their bonuses doubled.

While paying more for higher quality is reasonable, it’s unclear that the QBP is accomplishing that goal.

The QBP was intended to reward high-quality plans and help people make informed enrollment decisions. While paying more for higher quality is reasonable, it’s unclear that the QBP is accomplishing that goal. The Medicare Payment Advisory Commission (MedPAC) said in 2023: “The current state of quality reporting is such that the Commission’s yearly updates can no longer provide an accurate description of the quality of care across MA plans.”

That lack of usable data remains, yet bonus payments continue to rise.

QBP Payments Over $13 Billion for 2026

KFF estimates that QBP payments will reach at least $13.4 billion in 2026, four times what they were in 2015 ($3 billion). This estimate may be conservative. MedPAC estimates it will be closer to $16 billion and flags that it “continues to be concerned that the MA quality-bonus program and star-rating system are not adequate to assess the quality of care that MA enrollees can expect to receive.”

Lawsuit Forcing Payments Even Higher

In May, in Clover Insurance v. HHS, a court found that CMS used impermissible star ratings measures, causing Clover Insurance to receive a lower rating—and bonus payment—than they should. After this decision, CMS recalculated Clover’s ratings, leading to an additional $127 million for 2027.

Since then, CMS has recalculated QBP ratings for the other MA organizations using a similar methodology, making changes if the new calculations led to a higher score.

CMS recalculated QBP ratings for the other MA organizations, making changes if the new calculations led to higher scores.

CMS has also appealed the initial Clover decision and other insurers have also sued based on the Clover reasoning, arguing for further changes.

MA Overpayment Must be Addressed

While the lawsuits wend their way through the courts, the QBP continues to funnel money to MA plans without convincing evidence that it is helping people with Medicare get high-quality care.

MA overpayment leads to an unlevel playing field and a cycle of tempting supplemental benefits and marketing abuses. At the same time, it drives up beneficiary costs and siphons billions of dollars from Social Security checks each year.

Whatever the lawsuits ultimately produce, we call on Congress to restructure MA payment, including a redesign or elimination of the QBP, to curtail rampant overpayment and refocus Medicare spending on high-quality, affordable coverage and care.