MedPAC: MA Growth Has Little Effect on Hospital Profits

The Medicare Payment Advisory Commission (MedPAC) found during its review of the rapid growth of Medicare Advantage (MA) that there is no clear link between higher MA enrollment and hospital profit margins. In simple terms, hospitals overall are not doing much better or worse financially just because MA enrollment is higher. MedPAC discussed a correlation of MA increases and hospital profits during its April meeting. MA now covers more than half of all Medicare beneficiaries and enrollment is expected to keep rising. Because of this, MedPAC continues to study effects on hospitals, nursing facilities, home health agencies and other providers.

MA plans are paid a set amount per person, which gives them strong reasons to manage costs. They often do this by using provider networks, prior authorization and negotiated payment rates.

For additional information or questions, contact Christina Berry, Manager, Economic Policy.