Table 2.

Potential Impact of Reforming the Medicare Advantage Payment System, Assuming a 50% Plan Bid Response.

	Current law	New benchmark scenarios
		Average bid + 20% buffer	Average bid + 15% buffer	Average bid + 10% buffer	Average bid + 5% buffer	Average bid (no buffer)
Benchmark	$ per enrollee per month
Average final benchmarka	808.85	801.61	789.46	768.60	735.73	696.26
Rebates	$ per enrollee per month
Average enrollee rebates	83.03	79.80	74.84	67.02	55.66	43.17
Quartile of average rebatesb
Lowest rebate quartile	16.71	16.68	16.48	15.56	11.27	4.51
Second rebate quartile	49.31	49.05	47.94	44.53	34.40	22.47
Third rebate quartile	87.72	87.20	84.13	74.63	61.54	48.03
Highest rebate quartile	181.09	168.65	152.83	135.14	117.06	99.18
Enrollees affected	% of enrollees
Facing current benchmark	100.0	79.8	62.7	36.0	9.0	0.1
Facing new benchmark	—	20.2	37.3	64.0	91.0	99.9
Savings for Medicarec	% of current law spending
Relative to current law	—	0.9	2.3	4.7	8.3	12.8

Note. Medicare Advantage public use data from the Centers for Medicare and Medicaid Services, 2015; HMO plans, local PPO plans, private fee-for-service plans, medical savings account plans, and special needs plans were included in the analysis. These plan types comprise the vast majority of enrollment. Employer group waiver plans, regional PPOs, and cost contracts were excluded as they have different payment systems and incentives. Details of the data and methods are provided in the appendix. HMO = health maintenance organization; PPO = preferred provider organization.

^aNational average final benchmark weighted by enrollment and adjusted for quality (plan star level). Under the new benchmark scenarios, the final benchmark equals the lesser of the current law and the new benchmark.

^bRebate quartiles were calculated based on enrollment and kept consistent across definitions of the new benchmark. These quartiles are unrelated to the quartiles of counties by which the Affordable Care Act calculates county-level benchmarks.

^cEstimated federal savings assuming no change in plan enrollment and a 50% plan bid response (for every dollar that the final benchmark is lower than the current law benchmark, bids would be $0.50 lower than the observed bids under current law).