White Paper
October 28, 2016

White Paper: The Impact of the Medicare Advantage Benchmark Cap on Beneficiaries

This issue brief explains the Medicare Advantage (MA) benchmark cap and highlights the consequences for MA beneficiaries.

The Department of Health & Human Services (HHS) is working to achieve goals of tying payments in Traditional Fee-For-Service (FFS) Medicare to quality and value. In Medicare Advantage (MA), payments are already tied to quality through MA’s Star Rating system which rewards plans with a 4-Star rating or higher (on a 5-Star scale) with a Quality Bonus Payment (QBP). The QBP directly benefits beneficiaries and must be applied to reducing cost sharing or increasing benefits for beneficiaries. The Star Rating system has been very effective at driving quality, in 2015 over 70% of MA enrollees were in QBP eligible plans, up from less than 20% in 2009.1 However, due to a policy known as the benchmark cap, beneficiaries in certain counties are not able to benefit from the program. Across the country, beneficiaries in over 40% of counties are negatively impacted by this policy.

This issue brief shows:

  • The benchmark cap undermines the Quality Bonus Payment (QBP) and leads to fewer benefits for MA beneficiaries.
  • Over 3 million MA beneficiaries in 4-Star or higher plans in nearly 1,500 counties are impacted by the benchmark cap and do not receive the full benefits of being in a high-quality plan.
  • Indiana University Health (IU HealthPlans), a Better Medicare Alliance (BMA) ally organization, operates an MA plan in capped counties. Their beneficiaries may not receive the full complement of supplemental benefits as a result.

The issue brief outlines the potential administrative and legislative solutions to address the benchmark cap issue.

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