Costs of Managed Care Plans Add Up for Medicare, Data Reveal

A congressional advisory panel unveiled research Friday that estimates Medicare managed care plans were paid nearly $193 billion more to care for beneficiaries from 2017 to 2021 relative to the cost of care in traditional fee-for-service Medicare.

The findings, detailed in the Medicare Payment Advisory Commission’s November meeting, attributed the disparate spending to two factors: aggressive “coding,” or the listing of patients’ potential illnesses, by private Medicare Advantage plan providers; and “favorable selection,” the movement into private Medicare Advantage plans of fee-for-service beneficiaries who have substantially lower health care costs than predicted.

Favorable selection and coding intensity caused Medicare Advantage ...