At its October 10 meeting, the Medicare Payment Advisory Commission (MedPAC), which advises Congress on Medicare issues, examined Medicare Advantage (MA) supplemental benefits and, more specifically, how they are financed.

MedPAC commissioners, like many, are grappling with understanding the array of supplemental benefits that MA plans offer; supplemental benefit users; and how much plans spend to deliver these services. Given the current lack of reporting on MA enrollees’ supplemental benefit usage by the MA plans, the October MedPAC report focused on supplemental benefit financing. However, MedPAC staff previewed that their June 2025 report will examine supplemental benefit usage and access by MA enrollees.

According to the October 10 report, nearly all MA plans bid below benchmark and receive rebate dollars to provide MA enrollees with supplemental benefits. These benefits range from reducing Part B and Part D premiums and cost sharing to offering non-Medicare services. Annual per enrollee rebate amounts paid to plans have more than doubled since 2018 to an average of $2,329 per enrollee per year in conventional MA plans and $3,090 for special needs plans (SNPs) to use for supplemental benefits. Rebate payments made to plans are now estimated to total $83 billion. In addition, plans have shifted what they spend these dollars on. In 2018, MA plans spent just 13% ($150 per enrollee) of these rebate dollars on non-Medicare services and dedicated  52% ($600 per enrollee) to reduce enrollee cost sharing but in 2024, plans are putting a greater proportion of the rebate dollars–27% ($627 per enrollee)–toward non-Medicare services while reducing the proportion dedicated to cost sharing assistance to 39% of the total ($908).

Nonetheless the actual dollar amount spent on each of these benefit categories has dramatically increased as the rebate payments to plans have more than doubled in the past 6 years. This shift is most pronounced in SNPs that now direct 85% of their rebate dollars toward covering non-Medicare services. This makes sense as a high proportion of SNP enrollees are dual eligibles where Medicaid covers their cost sharing making this an unnecessary benefit to be offered by the SNP.

Over this same time, the report shows significantly more enrollees in MA and SNP plans have access to primarily health-related benefits such as meals (78% of enrollees in 2024), over-the-counter items (89%), and remote-access technology (87%). The Special Supplemental Benefits for Chronically Ill offerings have also grown since first authorized in 2020 but still only touch 23% of enrollees (food and produce) and 18% have access to general supports for living (e.g. assistance with rent, utilities, etc.).

Commissioners represent wide-ranging views on the Medicare program including the role of MA and whether access to supplemental benefits should be limited to MA enrollees. MedPAC chair Michael Chernew summarized the group’s areas of consensus following their discussion of the supplemental benefits report. Commissioners agree that more work needs to be done to understand the value of these benefits and that greater transparency for consumers is needed, specifically on the benefits consumers can access through these plans, what the benefits include (e.g. annual hearing exam vs. hearing aids) and the  associated out-of-pocket costs for accessing these benefits when selecting a plan.

Additionally, MedPAC  commissioners believe that taxpayers deserve to know what they are paying for and whether that is the best way to use these available dollars.

The next report on supplemental benefits will be issued in June 2025. It is expected to cover the benefits being offered, an assessment of their utilization and the amount MA plans are spending to deliver these benefits. Completion of this report will depend on the accuracy and completeness of MA plan encounter data collected by CMS.