Medicare Advantage
In 2014, 30 percent of all Medicare beneficiaries chose to receive coverage from private health plans through Medicare Advantage (MA) rather than traditional Medicare. One rationale for MA is that plans have flexibility and financial incentives to provide innovative and efficient care, because plans are paid on a capitated basis and receive bonus payments for achieving quality thresholds. In addition, allowing beneficiaries their choice of MA plan may lead to competition across plans in quality, efficiency, and value of care. This session considers three central questions related to the functioning of MA. The first paper investigates how differences in the financial incentives facing health plans under MA (e.g., from capitation) affect treatment patterns and patient outcomes. This paper focuses on institutional post-acute care, comparing MA enrollees (where MA plans contract directly with providers) to traditional Medicare enrollees (where post-acute providers receive per diem or episode-based payments from Medicare). The second paper investigates the extent to which MA beneficiaries respond to changes in health premiums by switching plans and explores the importance of search costs and plan loyalty. The third paper investigates whether quality-based bonuses to MA plans lead to improvements in quality of care.