Question

• How does MACRA affect incentives to create a Medicare HMO?

• What incentives does the Medicare benchmark create?

Answer 1

• The Medicare Access and CHIP Reauthorization Act (MACRA) makes significant changes to the Medicare payment system by introducing a quality-based payment model. MACRA changes how providers caring for Original Medicare members are reimbursed and includes incentives for risk-based payments by all types of payers.

Medicare Health Maintenance Organizations (HMOs) are private plans that the federal government pays to administer Medicare benefits. ... Some HMOs offer additional benefits, such as vision and hearing care. Eligibility and costs basics. You must have both Parts A and B to join a Medicare HMO.

• New research from the Commonwealth Fund found that the Medicare Advantage (MA) benchmark bidding system, which was intended to reduce plan inefficiencies, has allowed health plans to benefit financially while remaining cost inefficient.

  Since 2006, Medicare offered MA health plans a rebate if their health plans achieved a cost lower than an Medicare-established benchmark, which accounted for the operating costs of a health and a beneficiary's expected costs. The benchmarks are intended to fund improvements to member benefits, but health plan benchmarks have allowed MA plans to earn rebates even with high costs, according to the researchers.

  Provisions in the ACA decreased benchmark averages from 118 percent of traditional Medicare spending during 2009 to 106 percent of spending in 2017, the team said. A review of CMS data found that reducing benchmark amounts did not curb cost increases among MA plans.Earned benchmark rebates for the highest cost plans were 153.9 percent larger than the lowest cost plans, so health plans could earn considerable financial rewards even with less efficient costs. There was a 17.7 percent difference between the lowest and highest benchmark quartiles of MA plan, meaning that some health plans could spend slightly more on operating costs and receive a rebate two and a half times larger than lower-cost plans.