Medicare Managed Care Plan Costs Continue to Spiral, Panel Finds

Medicare will spend $83 billion more this year to care for beneficiaries in private Medicare Advantage plans compared to the cost of care in the traditional fee-for-service program, according to an advisory committee report released Friday.

The Medicare Payment Advisory Commission’s annual March report to Congress says the 22% cost difference stems from two factors: aggressive “coding” of potential illnesses by Medicare Advantage providers; and “favorable selection,” the movement to MA plans of beneficiaries with substantially lower costs than predicted.

The higher spending helps fund extra benefits for MA enrollees, but they’re “subsidized by the taxpayers and beneficiaries who fund ...