Medicare Advantage - Payment and Risk Adjustment

Medicare Advantage - formerly known as Medicare + Choice - formerly known as Medicare Risk - this is a program where private health insurance companies contract with the federal government to replace regular Medicare FFS with equivalent or better benefits. The theory is that with managed care the private sector could provide benefits more efficiently. In reality - they mostly can't. What the MMA did was make sure that *at minimum* private health insurers get at least FFS costs and in many places substantially more. In addition - in the past insurers were paid based on the demographics of their enrolled population but the people who tended to enroll were actually healthier than the average person in their demographic - this is known as "cherry picking". Medicare has been phasing in risk adjustment of payment where health plans get paid according to the risk profile of the people enrolled. This gives plans more of an incentive to serve sicker populations that could benefit from more intensive management of their care. However the "budget neutrality" adjustment still makes it so that the total dollars going to private plans is the same as if they were paid according to demographics - the money is just allocated slightly differently. Basically we are paying private companies extra profits and due to the way the payments are calculated the extra payment is especially concentrated in certain areas (wanna guess who recieved the most benefit in Medicare Advantage from the MMA?)

Also Private Fee for Service - may write about how this is a silly idea later.