A new Medicare Payment Advisory Commission (MedPAC) report examined the use of supplemental benefits in Medicare Advantage (MA) plans and spending associated with them.
MedPAC reviewed the results of the report during its virtual April meeting to determine the value of supplemental benefits, such as hearing, vision, dental care, over-the-counter allowances, meals, and transportation. Most of these benefits are financed in the form of Medicare rebates that are added to the monthly payments Medicare pays MA plans. The rebates are based on the difference between a plan’s bid and a county-specific payment benchmark, as well as a plan’s Star rating.
In 2024, Medicare paid MA plans $83 billion in rebates, Stuart Hammond, a MedPAC senior analyst, told the commission. Hammond estimates that plans used about $38 billion of those funds to pay for the supplemental benefits. That estimate, he said, includes the amounts that plans retain for administrative costs and profit margins.
The report also found:
- Conventional MA plans spent an average rebate amount of $2,329 per beneficiary in 2024 but 27 percent of the spending went to supplemental benefits. Dental benefits accounted for the largest share (42 percent) of non-Medicare spending.
- Special Needs Plans spent an average amount of $3,090 per beneficiary in 2024 but 85 percent of the spending went to supplemental benefits. Most of the rebates are primarily spent on “other” types of non-Medicare services.
However, he said, gaps in the data make it difficult to assess the value that supplemental benefits may provide to enrollees and the program. A preliminary analysis indicates it may be possible to use encounter data to assess the use of vision and hearing services, but the data is insufficient for analyzing use of other supplemental benefits.
Hammond said more data may be available in the future now that the Centers for Medicare & Medicaid Services has implemented new policies that will require plans to report some information on how enrollees use the supplemental benefits and spending.