Medicare Advantage

A private health plan that replaces Original Medicare for someone aged 65 or over (or on disability). The government pays the insurer a fixed amount per member per month and the insurer takes the risk that the member's care costs more than that -- so these members carry real underwriting risk, and a lot of revenue per head. It is the most fought-over line of business in managed care because enrollment is growing, the per-member revenue is the highest of any government line, and the payment rate is set annually by CMS rather than negotiated. Two things to watch: the annual CMS rate notice, which moves the whole sector's economics at once, and risk-adjustment audits, where the government checks whether the diagnoses an insurer submitted actually justify the payments it received.

Related terms

Accounts Payable · Adjusted EBITDA · Adjusted EBITDA Ex-SBC · Administered-Only Members · ADR · ARPU

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