Methodological Issues in MedPAC’s Analysis of Medicare Advantage

This technical report reviews methodological issues in the Medicare Payment Advisory Commission's (MedPAC) analysis of favorable selection in Medicare Advantage (MA) plans. It assesses findings from MedPAC and the USC Schaeffer Center, particularly focusing on the claim that MA plans attract lower-cost beneficiaries. The report critiques the assumptions made by MedPAC, noting that the data used primarily reflects fee-for-service (FFS) beneficiaries rather than those enrolled in MA. It highlights the exclusion of direct MA enrollees and other significant groups, which may skew the conclusions drawn about cost profiles. Additionally, the report discusses the implications of excluding MA bid data and the potential overestimation of favorable selection impacts. It emphasizes the need for a more comprehensive analysis to validate the conclusions regarding overpayments in the MA program, suggesting that current methodologies may not accurately reflect the complexities of beneficiary cost profiles and healthcare utilization patterns.