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Medicare Advantage Organizations: Actual Expenses and Profits Compared to Projections for 2005
James C. Cosgrove (au)
Medicare Advantage organizations (MAO) offer an alternative to Medicare fee-for-service (FFS) program. Payments to MAO are, in part, based on the revenue expenditures projections prior to the start of each contract year. On average, MAO projected they would spend 87% of their 2007 revenue on medical exp., 9% on non-med. exp., and that the remaining 4% would go to profits. The accuracy of MAO projections is important because these projections also affect the extent to which MA beneficiaries receive additional benefits not provided under FFS and the amounts beneficiaries pay in cost sharing and premiums. This report focuses on how MAO 2005 actual med. exp., non-med. exp., and profits compare to projections for the same year. Illus.
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