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Medicare Advantage Plan’s Response to Risk Adjustment

Posted Sep 03 2012 12:00am

Medicare beneficiaries have the option to enroll in private plans to have them operate their benefits rather than use the tradiational Medicare Fee-for-services (FFS) program.  Medicare pays these private plans, known as Medicare Advantage (MA) plans, premiums based on the health status of their enrollees.   Medicare uses a risk score to measure beneficiary health status.

Can MA plans strategically select enrollees who will fall below expected cost?  Does the MA program save Medicare money?  Today’s post answers these questions drawing largely from a 2011 study by Brown, Duggan, Kuziemko and Woolston .

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