Medicare Advantage reimbursement lower than traditional Medicare, private plans

money

Medicare Advantage plans pay hospitals lower rates than both traditional Medicare and commercial plans, according to a study published in Health Affairs.

MA plans pay 5.6 percent less for hospital services than fee-for-service Medicare plans. When MA’s narrower provider networks are not taken into account, the program pays 8 percent less for the same services than fee-for-service Medicare.

Medicare Advantage plans also generally feature better coordinated care than traditional Medicare, healthcare policy researcher Laurence C. Baker notes in the study. 

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Both MA and traditional Medicare pay providers less than the much higher--and growing--rates paid by commercial plans, according to the research paper. "At least some of this difference is a result of the much higher prices that commercial plans pay for very profitable service lines" such as orthopedics and interventional cardiology, Baker points out.

Rising MA enrollment has had a spillover effect in driving down the price of traditional Medicare plans. However, there have been a number of improper payments tied to Medicare Advantage that have created billions in losses for the government.

- read the Health Affairs study (subscription required)

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