Health plans are set to rake in $11.8 billion in Medicare Advantage (MA) quality bonus payments, according to a new analysis from KFF, though that does represent an 8% decline from 2023.
This year marked the expiration of certain pandemic-era policies that offered a temporary boost to insurers’ star ratings, according to the report. However, the study notes that despite the decrease from 2023, bonus payments in 2024 are higher than any year from 2015 to 2022.
Most, or 72%, of MA enrollees are in plans that will receive a quality bonus payment this year, which is down from 2023’s 85% but on par with 2022 (75%), the analysts found.
“As Medicare Advantage enrollment continues to climb, understanding the effects of the quality rating system and associated bonus payments, including the impact on Medicare spending and how it is distributed across different types of plans, is helpful in assessing the implications of the program,” the researchers said.
There is notable variability between companies on how much they’re receiving in bonus payments. UnitedHealthcare, which is the largest player in MA in terms of enrollment, will earn the highest total payment at $3.4 billion, according to the report.
Kaiser Permanente, meanwhile, will earn the highest payment per enrollee at $516. UHC and Humana, which together account for just shy of half of the MA market, are set to receive 50% of quality bonus payments this year.
Overall, payouts tend to track with market share, the study found. Humana may earn $2.5 billion in bonus payments. Blue Cross Blue Shield plans, including Elevance Health’s Anthem BCBS, will receive $1.7 million, and CVS is set for a $1.1 million payout to its Aetna unit.
Kaiser Permanente is expected to bring in $976.4 million in bonus payments, and Centene will likely earn $34.2 million.
As it is set for the lowest payment, Centene had the lowest bonus per enrollee at $32. Almost all (99%) of Kaiser enrollees are in a plan that will receive a bonus payment, compared to just 8% of enrollees in Centene plans.
The highest average payout per member is $456 among employer-sponsored and union-backed MA plans, while the lowest on average was for special needs plans at $330.
The report warns that this disparity suggests there are implications in the quality bonus program for health equity. For instance, the number of people enrolled in a special needs plan that is set to receive a bonus only topped 80% once, in 2023.
By comparison, that share of people in an employer- or union-sponsored MA plan that would earn a bonus did not drop below 80% in any year from 2015 to 2024.