Benchmark payments

(a) Eliminating the county quartile system Section 1853(n)(2)(A) of the Social Security Act (42 U.S.C. 1395w–23(n)(2)(A)) is amended— (1) by redesignating clauses (i) and (ii) as subclauses (I) and (II), respectively, and indenting appropriately; (2) by striking is the product of and inserting is— (i) for each of 2012 through 2027, the product of; and (3) by adding at the end the following new clause: (ii) for 2028 and each subsequent year, is the base payment amount specified in subparagraph (E) for the area and year adjusted to take into account the phase-out in the indirect costs of medical education from capitation rates described in subsection (k)(4) and, for 2021 and subsequent years, the exclusion of payments for organ acquisitions for kidney transplants from the capitation rate as described in subsection (k)(5).. (b) Modifications to base payment amount Section 1853(n)(2) of the Social Security Act (42 U.S.C. 1395w–23(n)(2)) is amended— (1) in subparagraph (E), by striking subparagraphs (F) and (G) and inserting subparagraphs (F), (G), and (H); and (2) by adding at the end the following new subparagraph: (H) Adjustment for favorable selection For 2028 and each subsequent year: (i) In general The base payment amount specified in subparagraph (E) for a year shall be adjusted to account for favorable selection between Medicare Advantage and the original Medicare fee-for-service program under parts A and B in accordance with this subparagraph. (ii) Analysis (I) In general In order to ensure the accuracy of the adjustment under clause (i), the Secretary shall annually conduct an analysis of any differences in selection between Medicare Advantage and the original Medicare fee-for-service program under parts A and B described in such subclause and publish the results of such analysis on the internet website of the Centers for Medicare & Medicaid Services in plain language and in research-downloadable files. The Secretary shall conduct such analysis among subgroups of the Medicare population, including by at a minimum race, gender, zip code, income level, and health condition. (II) Timing The Secretary shall complete such analysis by the date necessary to ensure that the results of such analysis are incorporated on a timely basis into the base payment amount for 2029 and subsequent years. (III) Data In conducting such analysis, the Secretary shall use data submitted with respect to 2025 and subsequent years, as available and updated as appropriate. (iii) Methodology In calculating the adjustment under clause (i) for each year, the Secretary shall apply the Medicare Payment Advisory Commission’s method for estimating favorable selection into Medicare Advantage as described in its March 2026 report to Congress. Applying such method, the Secretary shall calculate a selection percentage to adjust for favorable selection between Medicare Advantage and the original Medicare fee-for-service program under parts A and B. The selection percentage shall be calculated before the intervention of Medicare Advantage plans as the ratio of expected spending for the national average Medicare Advantage beneficiary relative to expected spending for the national average fee-for-service beneficiary, after standardizing for measured risk A value of 1 indicates no difference in expected spending while values below 1 indicate lower expected spending in Medicare Advantage than in fee-for-service Medicare for beneficiaries with the same risk scores. The base payment amount specified in subparagraph (E) shall be multiplied by the selection percentage to yield a selection-adjusted base payment amount. The selection-adjusted base payment amount shall replace the prior base payment amount in all calculations of payment benchmarks for Medicare Advantage. (iv) Medpac review The Medicare Payment Advisory Commission shall conduct and publish a review of the analysis conducted under clause (ii) and any adjustments made under clause (i) based on such analysis not later than 2 years after implementation of this subparagraph and biennially thereafter..