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Annual bonus payments from the federal government to Medicare Advantage insurers have increased every year since 2015 and will reach at least $12.8 billion in 2023, a new KFF study found.

To encourage Medicare Advantage plans to compete for enrollees based on quality, the Affordable Care Act established a quality bonus program that increases payments to plans based on a five-star rating system. Plans may, but are not required to, use the additional payments to cover the cost of supplemental benefits, including reduced cost sharing, services not covered by traditional Medicare and rebates against the Part B and/or Part D premiums. Among the key findings of the study:


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