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Comparison of Projected Enrollment in Medicare Advantage Plans [i] (November 21, 2009)

handle is hein.congrec/cbo1088 and id is 1 raw text is: November 21, 2009 Comparison of Projected Enrollment in Medicare Advantage Plans and Subsidies for Extra Benefits Not Covered by Medicare Under Current Law and Under the Patient Protection and Affordable Care Act Current Law Under current law, CBO projects that the number of Medicare beneficiaries enrolled in Medicare Advantage plans will grow from 10.6 million in 2009 to 13.9 million in 2019. We also project that the amount by which payments to those plans will exceed their bids will grow from an average of $87 per member per month in 2009 to $135 per member per month in 2019. Medicare Advantage plans use those additional payments to provide their enrollees with extra benefits that are not covered by Medicare: either health care services, such as vision care or dental care, or subsidies of beneficiaries' out-of-pocket costs for Part B or Part D premiums or cost sharing for Medicare-covered benefits. CBO does not have a basis for projecting the distribution of additional benefits among those categories. The rebate-that is, the amount of the subsidy that plans receive to provide extra benefits-depends on the difference between the plan's bid and a benchmark that is set using a formula. The benchmarks currently range from about 100 percent to over 150 percent of local per capita spending in the fee-for-service (FFS) sector. The difference between bids and benchmarks tends to be largest in areas where plans are able to provide Medicare-covered services for less than the average cost per enrollee in the FFS sector. If the plan's bid is below the benchmark, Medicare pays the plan 75 percent of the difference between the bid and benchmark to subsidize extra benefits not covered by Medicare. On average, CBO projects that rebates to plans in areas with bids that currently are below FF S costs will average $172 per member per month in 2019. By contrast, CBO projects that rebates to plans in areas where bids are above FFS costs will average $98 per member per month in 2019 (see attached table). Patient Protection and Affordable Care Act (PPACA) The legislation would set benchmarks equal to the average of local plan bids, rather than tying them to fee-for-service spending. Similar to current law, a plan that bids above the new benchmark would be required to charge the difference to its enrollees. A plan that bids below the benchmark would receive a rebate of the entire difference, which it would be required to pass through to its enrollees in the form of health care services not covered by Medicare or reduced cost sharing. (Plans could no longer use the rebates to subsidize Part B or Part D premiums.) In addition, the legislation would require Medicare to pay additional rebates to plans that serve beneficiaries who were enrolled in the plan on the date of enactment of the PPACA and to make additional payments to plans that achieve certain quality ratings. Plans would use those additional payments to provide additional extra benefits.

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