Medicare Advantage Quality Bonus Payments Increasing

Updated June 12, 2025
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Payments to⁣ Medicare Advantage plans through the quality bonus program are increasing, outpacing ⁤conventional ‍Medicare spending, ⁢according to a new ⁢analysis. These bonus payments are risk-adjusted, possibly leading to‍ even higher⁤ payouts. Plans might⁣ also increase bids when benchmarks rise ‍due to bonus status, further driving up costs.

In 2025,individual plans⁢ account for 61% ($7.8 billion) of bonus spending and 62% of enrollment. Employer plans account for 20% ($2.5 billion) of bonus‍ spending and‍ 17% of enrollment, while ‍special needs plans account⁤ for 19% ($2.4 billion) of bonus spending and 21%⁤ of enrollment.

The analysis found ‍that 75% of Medicare Advantage enrollees, nearly ‍26 million people, are ⁤in plans receiving bonus payments in 2025, up⁣ from 55% in 2015.

The average annual⁣ bonus payment per enrollee in 2025 is $372, more than double the $184 ⁢average in 2015. Employer-⁤ and union-sponsored plans receive the highest average ‍bonuses, at $438 per enrollee, compared to ⁣$368 for individual plans and $332 for special needs plans.

Employer plans have higher ⁣average star ratings, resulting in a larger‍ share of enrollees receiving coverage from ‍plans that qualify for bonuses. From 2015 to 2025,at ⁢least 80% of enrollees in employer- or union-sponsored plans received a bonus.in contrast,individual and special needs plans only reached that⁤ threshold⁤ in 2023.

The relatively low bonus payments for special‍ needs plans raise concerns about the implications for high-need beneficiaries,including those dually eligible⁢ for Medicare and Medicaid.

What’s next

The Centers for Medicare & Medicaid Services (CMS) will continue to ⁤monitor Medicare Advantage plan performance and bonus payments to ensure ⁤program integrity and equitable distribution of funds.