Medicare Managed Care: Better Risk Adjustment Expected to Reduce Excess Payments Overall While Making Them Fairer to Individual Plans

Pursuant to a congressional request, GAO discussed the adjustment of Medicare's payments to managed care plans in the Medicare Choice program, focusing on the: (1) importance of improving the current risk adjustment method; (2) implications of rate-setting changes implemented in 1998; and (3) the advantages and drawbacks of the Health Care Financing Administration's (HCFA) proposed new interim risk adjuster.