Government Proposes Increased Payment Rate to Medicare Advantage Carriers

Providers of Medicare Advantage (Medicare Part C) plans will see an increase in revenue of 0.93%. The rules impacting the expected 0.93% increase will be finalized in April 2020.

Published Feb. 11, 2020

Medicare Advantage (Medicare Part C) insurance carriers are set to see an increase in government reimbursement rates in 2021. 

The Centers for Medicare & Medicaid Services (CMS) announced on February 5 their proposed changes to Medicare Advantage plans that could result in a 0.93 percent increase in revenue for the carriers of these private Medicare insurance plans beginning in 2021.1

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The 2021 Rate Announcement will be finalized in April 2020.

What are Medicare Advantage insurance companies?

Medicare Advantage plans serve as an alternative to Original Medicare, which is made up of Medicare Part A and Medicare Part B.

Medicare Advantage plans, sold by private insurers, are required by law to provide the same basic benefits as Original Medicare. Many Medicare Advantage plans may also offer coverage for things that Original Medicare doesn’t cover, such as dental, vision and hearing care.

Most Medicare Advantage plans include prescription drug coverage. 

Over 34 percent of Medicare beneficiaries belongs to a Medicare Advantage plan, and more than 100 different insurance carriers offer Medicare Advantage plans.2

How does government reimbursement to Medicare Advantage plan carriers work?

Carriers of Medicare Advantage plans are paid a set rate by the government to help manage care.

These payments are taken from two funds held in trust by the U.S. Treasury:

  • The Hospital Insurance Trust Fund that pays for Medicare Part A hospital coverage and administrative costs.

  • The Supplementary Medical Insurance Trust Fund that pays for Medicare Part B outpatient benefits. 

Medicare Advantage plans are often supplemented by a monthly premium charged to members, although many plans come with no premium at all. In fact, the average monthly premium for Medicare Advantage plans has actually decreased over recent years. 

The government payment rate affects how much the insurers are allowed to charge in premiums and impacts the benefits that may be offered.

A proposed payment rate is released every year, followed by a public comment period and then a finalized rate. The payment rate that is finalized in April 2020 could be higher or lower than the proposed 0.93 percent increase. 

Although the proposed payment rate for 2021 represents an increase, it remains a smaller increase when compared to recent years. The 2020 payment rate was an increase of 2.53 percent from the previous year. In 2019, the payment rate increased by 3.4 percent from 2018.   

Learn more about your Medicare Advantage plan options

Depending on where you live, you may have access to Medicare Advantage plans from a number of different insurance carriers. You can use factors such as plan premiums, deductibles, benefits offered and more as you compare available plans to find the right fit for your needs.

You can call to speak with a licensed insurance agent who can help you compare plans, or you can compare plans online for free, with no obligation to enroll.

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About the author

Christian Worstell is a licensed insurance agent and a Senior Staff Writer for He is passionate about helping people navigate the complexities of Medicare and understand their coverage options.

His work has been featured in outlets such as Vox, MSN, and The Washington Post, and he is a frequent contributor to health care and finance blogs.

Christian is a graduate of Shippensburg University with a bachelor’s degree in journalism. He currently lives in Raleigh, NC.

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