Poverty and InequalitySexual and Reproductive HealthFamily, Maternal & Child HealthMethodology

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

TitleDo Medicare Advantage Rebates Reduce Enrollees' Out-of-Pocket Spending?
Publication TypeJournal Article
Year of Publication2018
AuthorsNicholas, LH, Wu, S
JournalMed Care Res Rev
Date PublishedNov 1
ISBN Number1077-5587
Accession Number30382801
Keywordsmanaged care, medicare Advantage, out-of-pocket spending, plan rebates

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.