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

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Medicare Advantage double bonuses in Puerto Rico did not improve plan quality or reduce enrollee costs. The policy increased Medicare spending, suggesting bonuses primarily benefited plans, not beneficiaries.

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Area of Science:

  • Health Economics
  • Public Policy
  • Medicare Advantage

Background:

  • Over 90% of Puerto Rico Medicare beneficiaries are in Medicare Advantage (MA) plans.
  • MA plans receive payments and quality bonuses; Puerto Rico gained double bonuses in 2018.

Purpose of the Study:

  • To evaluate the impact of Medicare Advantage double bonuses in Puerto Rico.
  • To assess effects on plan quality, enrollee costs, and Medicare spending.

Main Methods:

  • Difference-in-differences analysis.
  • Utilized Centers for Medicare and Medicaid Services (CMS) data from 2012-2022.

Main Results:

  • Double bonuses were not linked to improved MA plan quality, premiums, or cost-sharing.
  • An increase in the number of MA plans offered was observed.
  • Estimated excess Medicare spending of at least $865 million in the first five years.

Conclusions:

  • MA double bonuses in Puerto Rico primarily benefited plans, not enrollees.
  • The policy led to significant excess Medicare spending.
  • CMS should reconsider or eliminate MA double bonuses due to questionable effectiveness and cost implications.