Association Between the Medicare Advantage Quartile Adjustment System and Plan Behavior and Enrollment

Area of Science:

• Health economics
• Health policy
• Medicare Advantage

Background:

• Medicare Advantage (MA) plans are increasingly popular, but concerns exist about insurer overpayment due to the quartile adjustment system.
• Eliminating quartile adjustments might reduce benefits and plan choices, potentially slowing MA enrollment.

Purpose of the Study:

• To investigate the association between the quartile adjustment system and county-level benefits, insurer offerings, and MA enrollment.
• To determine if modifying the quartile adjustment system impacts MA plan characteristics and enrollment.

Main Methods:

• Utilized a regression discontinuity design analyzing data from January 2017 to December 2021.
• Examined 1557 county observations to assess changes in insurer behavior and MA enrollment across quartile adjustments based on historical Medicare spending.

Main Results:

• A 1% increase in quartile adjustment correlated with higher benchmarks ($6.36) and lower premiums ($0.51 decrease).
• No significant changes were observed in primary care copayments, Part B premium rebates, supplemental benefits, plan/contract availability, or MA enrollment rates.
• The share of plans charging premiums decreased by 0.68 percentage points with a 1% increase in quartile adjustment.

Conclusions:

• Medicare Advantage plans demonstrate low sensitivity to moderate changes in payment rates.
• Modifications to the quartile adjustment system may offer potential savings without substantially altering MA benefits or enrollment.