PMC

Average Plan Bids, 2006 to 2010^a
HMO indicates health maintenance organization; PFFS, private fee-for-service; PPO, preferred provider organization.
^aUnadjusted average bids for HMO, local PPO, and PFFS plans.

Average Plan Rebates, 2006 to 2010^a
HMO indicates health maintenance organization; PFFS, private fee-for-service; PPO, preferred provider organization.
^aUnadjusted average rebates for HMO, local PPO, and PFFS plans.

Overview of the Medicare Advantage Bidding System^a
CMS indicates Centers for Medicare & Medicaid Services.
^aThe Medicare Advantage bidding system is used to determine payments for health plans that enroll Medicare beneficiaries. Two scenarios are possible. If the bid is above the benchmark (panel A), CMS pays the plan the administratively set benchmark. The plan must collect the difference through enrollee premiums. If the bid is below the benchmark (panel B), CMS pays the plan its bid as well as an additional 75% of the difference between the bid and the benchmark that the plan must return to beneficiaries as a rebate. Rebates may be additional benefits (eg, dental or vision coverage) or lower premiums (for Part B or Part D if prescription drug coverage is offered). The remaining 25% of the difference is returned to Medicare.