However, plans’ ability to keep these and other payments as profit is not unlimited – Medicare Advantage plans must meet medical loss ratio (MLR) requirements of at least 85 percent, and are required to issue rebates to the federal government if their MLRs fall short of required levels. The additional payment may be used to reduce cost sharing or cover the cost of providing supplemental benefits, but there is no requirement that plans use the portion of their payment attributed to bonus dollars for this purpose. The benchmark for plans without ratings due to low enrollment or being too new is increased by 3.5 percent.
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The benchmark for plans that receive at least 4 stars is increased by 5 percent in most counties, and by 10 percent in double bonus counties (urban counties with low traditional Medicare spending and historically high Medicare Advantage enrollment). The contract (and plans within the contract) are rated on a 1 to 5-star scale, with 1 star representing poor performance, 3 stars representing average performance, and 5 stars representing excellent performance.Īs a result of changes made in the Affordable Care Act (ACA), plans that receive at least 4 stars and those without ratings (due to low enrollment or being too new) receive additional quality bonus payments from Medicare. All plans that are part of a single Medicare Advantage contract are combined when calculating the quality rating (most contracts include several plans).
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Medicare Advantage plans receive a star rating based on performance measures that are intended to help potential enrollees compare plans available in their area as well as encourage plans to compete based on quality.