Medicare's key advisory panel has released its latest report to Congress, and analysts note that spending on supplemental benefits in Medicare Advantage (MA) has grown significantly over the past several years.

The Medicare Payment Advisory Commission (MedPAC) report (PDF) estimates the government will pay MA plans about $86 billion in rebates to provide supplemental benefits to enrollees, which amounts to about 17% of total payouts in the program, or about $2,530 per person.

That's grown from $21 billion in rebates for 2018, which equaled about $1,160 per enrollee for supplemental benefits.

Bids from insurers for 2025 also offer a look at how they intend to use those funds, according to MedPAC. Based on these filings, payers intend to put $39 billion of the rebates toward additional, non-Medicare offerings for members and $27 billion toward efforts to reduce cost-sharing for Medicare services.

However, the commission's researchers said there's little transparency into how these dollars are actually being spent. This is especially true for benefits in either Medicare Part B or Part D, as those benefit improvements or premium reductions are noted directly between MA plans and the Centers for Medicare & Medicaid Services (CMS).

The MedPAC report also said that spending on supplemental offerings has ramped up as both the CMS and legislators have offered plans greater flexibility to design them, including programs that may target specific disease states or equity challenges.

"These new flexibilities, combined with the growth in rebate dollars, have allowed MA plans to significantly expand the number of supplemental benefits they offer," the MedPAC researchers wrote. "Across almost every type of supplemental benefit, our analysis of benefits offered by plans finds that the share of MA enrollees in plans offering these benefits has increased since 2018."

Strategies around which supplemental benefits are offered tend to vary between plan types, according to the report. In traditional MA plans, much of the rebate funding is put toward lowering the cost for Part A and Part B services.

Dual special needs plans tend to handle things differently, the analysis found, as people enrolled in these plans are eligible for both Medicare and Medicaid. This means they likely need less support around costs for Medicare-eligible services and instead see rebates put toward cost-sharing for non-Medicare services.

Many plans have also embraced "combination benefits" programs, where beneficiaries are provided with flex cards that they can put toward a number of services including medical care, over-the-counter products, groceries and more.

Given the growth in these supplemental offerings, MedPAC argues more should be done to understand how—and whether—beneficiaries are using them. The CMS does require that MA plans submit encounter data for all services, including supplemental benefits, but MedPAC's research suggests these data are often incomplete.

The CMS began a process in 2024 that would push insurers to submit more complete data around utilization and spending for supplemental MA benefits, according to the report.

Lacking data makes it difficult to quantify whether payouts to MA plans are being used appropriately, according to the report.

"The data that Medicare collects are currently insufficient for examining the use of most of these benefits," MedPAC's researchers wrote. "The lack of reliable data makes it difficult to answer many important questions about how the rebates Medicare pays to MA plans are used."