Insurers managing Medicare Advantage plans provide varying degrees of rebates and additional benefits to their members based on geographical location, according to a report from healthcare consulting firm Avalere Health.
When a Medicare Advantage plan bids less than the local government benchmark for a traditional Medicare plan, it receives a rebate of 75 percent of the difference. Insurers must pass along these rebates to their members either by providing extra benefits, such as vision or hearing coverage, or lower cost sharing, such as less expensive prescription drug premiums, reported Kaiser Health News.
Avalere analyzed 2010 Medicare Advantage payment data, including information on plan bids, rebates and risk scores--which the Centers for Medicare & Medicaid Services recently released for the first time--and found that Medicare Advantage plans provided an average of $73 in extra benefits at no additional charge to their members.
However, Medicare Advantage plans don't provide the same level of benefits or cost sharings. Plans operating in states where traditional Medicare plan costs are especially high tend to provide better rebate packages, most likely because, according to Avalere, those plans "can often perform more efficiently than Medicare and are able to bid in a way that may be lower than benchmarks," LifeHealthPro reported.
Insurers operating Medicare Advantage plans in California, Florida, Louisiana, Missouri, New Mexico, Nevada, New York, Texas and Washington, D.C., provide more benefits at no cost to their members than the national average. Conversely, plans in Alaska, Montana, Wyoming, South Dakota, Minnesota, New Hampshire and Delaware provide less than the average--between $0 and $25 in extra value--to their members, according to The Hill's Healthwatch.
In addition, Avalere found that HMO Medicare Advantage plans were more likely to provide higher rebates and more supplemental benefits to their members than PPO plans. This may be because, as Avelere suggested, HMOs are more integrated plans so they can better control costs, thereby leading to lower bids and higher rebates.