Evaluating Medicare Advantage Benchmark Setting Methodology on Rural Counties

This brief explores how the process for setting benchmark payments for Medicare Advantage plans may create different incentives across rural and urban counties. Researchers found that the benchmark setting process creates uneven incentives, leaving plans operating in nonmetropolitan counties with less incentive to offer supplemental benefits or reduced cost-sharing for enrolled beneficiaries.

Key Findings:

• Rural counties are less likely to rank in the lower Medicare Fee-for-Service (FFS) spending quartiles that receive a higher percentage of the county benchmark: 41 percent of rural counties are categorized in combined quartiles 1 and 2 versus 59 percent of urban counties.
• Global caps (maximum benchmark payments based on pre-Affordable Care Act county FFS spending) on benchmark payments are much more likely in rural counties, particularly those in the lower-spending quartiles, reducing incentives for supplemental benefits or reduced cost sharing.