Medicare Advantage (MA) is the private-sector based counterpart to fee-for-service Medicare in which beneficiaries receive their Medicare Part A and Part B benefits through private health plans that contract with the federal government. In a new primer, Director of Health Care Policy Michael Baker explains how MA risk adjustment works and walks through diagnosis documentation and the drivers of plan payments.

Key points:

• Under the payment model, Medicare gives plans an agreed-upon amount per plan enrollee in exchange for assuming financial risk and complying with program rules.
• MA premiums, though calculated on a geographic basis through a benchmark-bid-rebate formula, are further adjusted through several mechanisms to ensure that plans are appropriately funded to provide coverage for beneficiaries.
• This primer explains how the Centers for Medicare and Medicaid Services adjusts the base capitated rate that CMS pays to plans for MA beneficiaries, including risk adjustment and coding intensity for MA plans.

This primer is part of a three-part series on Medicare Advantage. The first paper focused on the annual rulemaking cycle, and the second paper focused on premium calculations.

Read the analysis.