Legislative and Regulatory Options for Improving Medicare Advantage.

Area of Science:

• Health economics
• Health policy
• Public health

Background:

• The Medicare Advantage program aimed to increase choice and reduce healthcare spending via capitated payments to private insurers.
• Concerns exist that Medicare Advantage is not meeting its cost-saving objectives.
• Specific payment policy features, including baseline payment determination, risk adjustment, and quality performance adjustments, are under scrutiny.

Purpose of the Study:

• To analyze the statutory basis of problematic Medicare Advantage payment design features.
• To explore legislative and regulatory strategies for improving Medicare Advantage program efficiency and cost-effectiveness.
• To identify the most impactful and feasible improvement measures.

Main Methods:

• Analysis of the legislative and regulatory framework governing Medicare Advantage payment policies.
• Examination of three key design features: baseline payment determination, risk adjustment, and quality performance adjustments.
• Evaluation of potential legislative and regulatory interventions.

Main Results:

• The current design of Medicare Advantage payment policies presents challenges to cost reduction.
• Risk adjustment and recouping overpayments from risk-score gaming are identified as critical areas for improvement.
• Regulatory strategies appear more feasible and impactful than broad legislative changes.

Conclusions:

• Regulatory enhancements to Medicare Advantage risk adjustment are crucial for program integrity.
• Implementing measures to prevent and recoup overpayments from risk-score gaming is essential.
• Targeted regulatory actions offer the most practical path to improving Medicare Advantage's cost-saving potential.