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Medicare Advantage (Part C)

Department of Health and Human Services

Under the Medicare Advantage (MA) Program, also known as Medicare Part C, beneficiaries can opt to receive their Medicare benefits through a private health plan. Currently, more than 11 million beneficiaries are enrolled in Medicare Advantage plans.

Agency Accountable Official: Ellen Murray, Assistant Secretary for Financial Resources

Program Accountable Official: Peter Budetti, Deputy Administrator for Program Integrity, Centers for Medicare and Medicaid Services



Total Payments (Outlays)more info


Improper Paymentsmore info


Improper Payment Ratemore info


10.4% Improper Payment Rate Target more info

All amounts are in billions of dollars

Tabular view for Projected improper payments Tabular View   

Program Comments

The Department of Health and Human Services (HHS) reports an annual Medicare Advantage (Part C) program payment error rate, which presents the combined impact on payments from two kinds of error: errors in the payment system and errors in risk scores used to adjust benefit payment amounts to Medicare Advantage plans.

Payment error from the Medicare Advantage payment system.  The payment system estimate captures errors caused by the transfer and interpretation of data and payment calculation errors in the system.

Risk Adjustment Error.  HHS pays Medicare Advantage plans on a risk-adjusted basis.  In other words, private health plans are paid greater amounts for coverage of sicker beneficiaries.  HHS uses a methodology that takes into account the varying costs associated with treating beneficiaries based on their health status.  Risk scores are based on, among other factors, beneficiaries’ clinical diagnoses submitted by private health plans to HHS.  Beneficiary risk scores are a key source of potential error in HHS’ payments to Medicare Advantage plans.

The 2010 Medicare Advantage payment error estimate is based on 2008 payments. There is a two-year lag between the payment year and the error rate reporting year because medical record reviews cannot begin until after completion of the risk score reconciliation for a payment year.  This reconciliation occurs about eight months after the end of a payment year.  Upon conclusion of this reconciliation, HHS can begin implementation of the risk adjustment data validation.  A random sample of beneficiaries is selected and HHS’ contractors conduct medical record review to validate the accuracy of plan submitted diagnoses for each sampled beneficiary.  The medical record review process is rigorous and thorough.  HHS analyzes the resulting data to develop an error estimate. Read More...