Do Medicare Advantage Rebates Reduce Enrollees' Out-of-Pocket Spending?

Med Care Res Rev. 2020 Oct;77(5):474-482. doi: 10.1177/1077558718807847. Epub 2018 Nov 1.

Abstract

The majority of Medicare Advantage (MA) plans receive payments that exceed their costs of providing basic Medicare benefits. There is controversy about whether these payments are passed on to the enrollees as supplemental benefits or are retained by plans. We used survey data on MA beneficiaries' actual out-of-pocket (OOP) spending linked to MA payment information to test whether higher plan payments and rebates lowered enrollee OOP spending. We used instrumental variables regression models to address concerns that plan payments and rebates may reflect anticipation of enrollees with particular health-spending profiles. We found that beneficiaries recovered only $0.65 of every $1.00 in payments exceeding fee-for-service spending through lower OOP spending but more than fully recovered the value of the rebates supporting supplemental benefits.

Keywords: Medicare Advantage; managed care; out-of-pocket spending; plan rebates.

Publication types

  • Research Support, N.I.H., Extramural

MeSH terms

  • Aged
  • Costs and Cost Analysis
  • Fee-for-Service Plans
  • Female
  • Health Expenditures
  • Humans
  • Male
  • Medicare Part C*
  • United States