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    Starting in 2014, the Affordable Care Act mandated that Medicare Advantage (MA) contracts spend at least 85% of total revenue on claims and quality improvement [ie, the medical loss ratio (MLR)] and submit revenue and cost data annually in MLR reports. These reports can improve transparency of the financial performance of MA contracts. However, little is known about revenues and costs of insurers that participate in MA and its impacts on status changes in the following year. To characterize revenues and costs of MA contracts in 2014, with a focus on MLRs and gross margins, and to assess heterogeneity in subsequent-year plan renewal and termination rates by gross margins. Cross-sectional data from MLR reports submitted in 2014 by MA contracts and from 2015 Part C & D Plan Crosswalk Files regarding plan renewal, termination, and other status changes from 2014 to 2015. Three hundred eighty-nine MA contracts. Primary outcomes are MLRs and gross margins. MLRs averaged 93% in 2014; 11% of contracts reported MLRs of at least 100%. Fifty-six percent reported negative margins, or costs that exceeded revenues. Seventeen percent of plans in contracts in the lowest quartile of gross margins were terminated in 2015, compared to under 5% of plans in the highest-margin contracts. In 2014, MA contracts reported MLRs greater than the mandatory minimum of 85%. Gross margins likely contribute to trends in plan and insurer availability. MLR reports from subsequent years can help explain fluctuations in insurers' participation in MA.


    Brent A Langellier, Sungchul Park. Financial Performance of Medicare Advantage Contracts in 2014 and Plan Renewal, Consolidation, and Termination Rates in the Subsequent Year. Medical care. 2020 Aug;58(8):674-680

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    PMID: 32049878

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