Double Bonuses Increased MA Spending In Puerto Rico By $865 Million But Did Not Achieve Plan Improvement Goals

In 2024, more than 90 percent of Medicare beneficiaries in Puerto Rico were enrolled in Medicare Advantage (MA) plans. MA plans receive capitated payments as well as quality-based bonuses, with MA plans operating in so-called double-bonus counties earning twice the usual bonus payments. Puerto Rico was excluded from the double-bonus payment program until 2018, when the double-bonus policy was extended to the territory. Applying a difference-in-differences approach to Centers for Medicare and Medicaid (CMS) data from the period 2012-22, we found that implementation of MA double bonuses in Puerto Rico was not associated with improvements in plan quality or changes in premiums or cost sharing, although it was associated with an increase in the number of plans offered. The findings imply that the additional payments from double bonuses primarily benefited MA plans rather than enrollees. We estimated that the policy resulted in at least $865 million in excess Medicare spending during its first five years. Together with prior evidence questioning the effectiveness of the double-bonus program, these results underscore the need for CMS to reconsider or eliminate MA double bonuses.