Rural Medicare Advantage Plan Payment in 2015

Payment to Medicare Advantage (MA) plans was fundamentally altered in the Patient Protection and Affordable Care Act of 2010 (ACA). MA plans now operate under a new formula for county-level payment area benchmarks, and in 2012 began receiving quality-based bonus payments. The Medicare Advantage Quality Bonus Payment Demonstration expanded the bonus payments to most MA plans through 2014; however, with the end of the demonstration bonus payments has been reduced for intermediate quality MA plans. This brief examines the impact that these changes in MA baseline payment are having on MA plans and beneficiaries in rural and urban areas. Key Data Findings. (1) Payments to plans in rural areas were 3.9 percent smaller under ACA payment policies in 2015 than they would have been in the absence of the ACA. For plans in urban areas, the payments were 8.8 percent smaller than they would have been. These figures were determined using hypothetical pre-ACA and actual ACA-mandated benchmarks for 2015. (2) MA plans in rural areas received an average annual bonus payment of $326.77 per enrollee in 2014, but only $63.76 per enrollee in 2015, with the conclusion of the demonstration. (3) In 2014, 92 percent of rural MA beneficiaries were in a plan that received quality-based bonus payments under the demonstration, while in March 2015, 56 percent of rural MA beneficiaries were in a plan that was eligible for quality-based bonus payments.