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. 

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)