Medicare Advantage Financing and Quality in Puerto Rico vs the 50 US States and Washington, DC

IMPORTANCE: More than 70% of Medicare beneficiaries in Puerto Rico are enrolled in a Medicare Advantage (MA) plan. Evidence of MA plan payments and quality in Puerto Rico compared with the 50 US states and Washington, DC (hereafter referred to as US mainland), is lacking, notably after implementation of the Patient Protection and Affordable Care Act (ACA). OBJECTIVE: To compare MA plan payments and quality in Puerto Rico with those in the US mainland and to evaluate how differences between MA plans in Puerto Rico and the US mainland changed after ACA implementation. DESIGN, SETTING, AND PARTICIPANTS: This cohort study used publicly available data on MA plans from January 1, 2006, to December 31, 2019, from the Centers for Medicare & Medicaid Services. Data analysis was performed from October 2019 to February 2022. EXPOSURES: Medicare Advantage plans in Puerto Rico and implementation of the ACA. MAIN OUTCOMES AND MEASURES: Primary outcomes were risk-standardized federal benchmark payments (the amount offered by the federal government for insuring a beneficiary of average risk), risk-standardized plan bids (a plan’s asking price for a beneficiary of average risk), and rebates received by plans. Additional outcomes included risk-adjusted benchmarks, risk-adjusted bids, actual plan payment, and aggregate plan quality ratings (star ratings). A difference-in-differences analysis examined differential changes in plan payments in Puerto Rico vs the US mainland after ACA implementation. RESULTS: Before ACA implementation, 211 MA plans in Puerto Rico and 13 899 plans in the US mainland were included. After ACA implementation, 433 MA plans in Puerto Rico and 29 515 plans in the US mainland were included. Before ACA implementation, risk-standardized benchmarks were 33% lower for MA plans in Puerto Rico than plans in the US mainland ($556.73 [95% CI, $551.82-$561.64] vs $831.15 [95% CI, $828.55-$833.75] per beneficiary per month [PBPM]). This gap increased to 38% after ACA implementation ($540.58 [95% CI, $536.86-$544.32] vs $869.31 [95% CI, $868.21-$870.42] PBPM). Risk-standardized plan bids in Puerto Rico were 46% lower before ACA implementation and 43% lower after ACA implementation compared with those in the US mainland. Rebates in Puerto Rico decreased from $168.50 (95% CI, $163.57-$173.42) PBPM before ACA implementation to $93.39 (95% CI, $89.51-$97.27) PBPM after ACA implementation, a decrease of $75.11 PMPM compared with a decrease of $2.05 PMPM in the US mainland. Plans in Puerto Rico received increased quality bonus payments, and the mean (SD) risk score for plans in Puerto Rico increased to 1.55 (0.31) after ACA implementation, which increased risk-adjusted benchmarks and actual plan payments, offsetting the widening payment disparity. CONCLUSIONS AND RELEVANCE: This cohort study found that after implementation of the ACA, federal benchmark payment amounts decreased in Puerto Rico compared with the US mainland. Responses by MA plans in Puerto Rico, including increased quality bonus payments and risk scores, offset this payment reduction, although actual plan payments in Puerto Rico were lower than those in the US mainland.