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Medicare Advantage Insurers to Receive $12.8B in Bonus Payments in 2023

Analysis  |  By Jay Asser  
   August 11, 2023

New analysis reveals UnitedHealthcare and Humana are expected to earn nearly half of total bonus payments.

Federal spending on Medicare Advantage (MA) bonus payments will reach at least $12.8 billion this year, with UnitedHealthcare the biggest winner among payers, according to research by KFF.

Bonus payments in the program have increased every year since 2015 and the 2023 figure represents an increase of nearly 30% ($2.8 billion) from 2022. As Medicare Advantage enrollment continues to grow, understanding how the quality rating system and bonus payments affect Medicare spending and beneficiary premiums will be critical, KFF analysts wrote.

Eighty-five percent of MA enrollees are in plans that are receiving bonus payments this year, compared to just 55% in 2015. The share of enrollees in plans that receive bonus payments this year is the highest since the current iteration of the program was implemented.

The average bonus payment per enrollee highest for employer- or union-sponsored MA plans ($460) and lowest for special needs plan ($374). Comparatively, the average bonus per enrollee is $417 for individual plans and $374 for special needs plans.

UnitedHealthcare will is expected to receive the biggest bonus payment at $3.9 billion, followed by Humana at $2.3 billion. The two payers, which account for 47% of all MA enrollment, will make up 49% of total bonus payments this year as payments largely correlate to distribution of enrollment.

Behind them are BCBS affiliates at $1.7 billion, CVS Health at $1.3 billion, Kaiser Permanent at $966.8 million, Centene at $321.6 million, and Cigna at $247.3 million.

The average bonus per enrollee ranges from $251 for those in Centene plans, to $523 for those in Kaiser Permanent plans.

As the share of MA enrollment in plans with at least a four-star quality rating increases, spending on bonus payments follows.

"This spending comes at a time when the Medicare program is facing growing fiscal pressures, which are exacerbated by growth in quality bonus program spending," analysts wrote. "Growth in the quality bonus program is projected to lead to faster growth in Medicare Advantage benchmarks (and corresponding spending) compared to traditional Medicare spending in upcoming years."

MA insurers experienced a rude awakening with star ratings in 2023 as the average rating across all plans declined to from 4.37 in 2022 to 4.15, while the number of a five-star contracts fell to 57, down from 74 in 2022.

Insurers like Centene are feeling the pain, with CEO Sarah London telling investors on a recent earnings call that the payer anticipates losing its only four-star MA contract.

The quality bonus program as a whole has received criticism for overpaying MA plans. A recent report by the Urban Institute found Issues with measures of beneficiary experience and administrative effectiveness, as well as the star rating system suffering from score inflation.

Jay Asser is the contributing editor for strategy at HealthLeaders. 


KFF estimates Medicare Advantage insurers are expected to collect at least $12.8 billion in bonus payments this year, which marks a 30% increase from 2022.

UnitedHealthcare tops all insurers with an expected bonus payment of $3.9 billion, followed by Humana at $2.3 billion as the two payers account for 49% of total bonus payments this year.

Payments have grown faster than enrollment over the same period, which is putting financial pressure on the Medicare program.

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