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ABSTRACT Under the Medicare Advantage (MA) quality bonus payment program, initiated in 2012, MA plans with relatively high quality performance that are located in "double bonus"-eligible counties- metropolitan areas with high MA enrollment and low fee-for-service Medicare spending-receive quality bonuses twice as large as those received by equivalently high-quality plans in double-bonus-ineligible counties. Using national data for 2008-18, we found that double bonuses were not associated with either improvements in plan quality or increased MA enrollment. Additionally, because Black beneficiaries were less likely to reside in eligible counties, double bonuses increased payments to plans to care for Black beneficiaries by $60 per year, compared with $91 for White beneficiaries. Our findings suggest that double bonuses not only fail to improve quality and enrollment but also foster a racially inequitable distribution of Medicare funds that disfavors Black beneficiaries. Our study supports eliminating double bonuses, thereby saving Medicare an estimated $1.8 billion per year.
Enrollment in Medicare Advantage (MA), or private health plans for Medicare beneficiaries, has grown remarkably, increasing from 11.1 million in 2010 (24 percent of beneficiaries) to 24.1 millionin 2020 (39 percent of beneficiaries).1 Fueled by generous payments from the Centers for Medicare and Medicaid Services (CMS), Medicare Advantage offers an attractive set of benefits coupled with typically modest premiums and cost sharing. However, some policy makers have argued that MA plans are overpaid2 and have questioned the program's value. In response, the Affordable Care Act (ACA) cut payments to MA plans while simultaneously creating the quality bonus payment program (referred to here as the bonus program).3 Originally implemented as the Quality Bonus Payment Demonstration in 2012, the bonus program is now a fixture of Medicare Advantage. It provides financial bonuses to plans that achieve higher star ratings (out of a possible five), based on the quality of preventive care, chronic disease management, patient experience, and plan performance. The bonus program is intended to ensure the quality of care in MA plans, which receive risk-adjusted capitated payments and thus may otherwise face an incentive to ration needed care.
An unusual feature of the MA bonus program is the delineation of "double-bonus" counties. In these counties higher-quality plans receive certain MA bonuses at double the dollar level paid to comparably performing plans in counties...