What happens to the money paid by Medicare to the Medicare Advantage Plans?
The Medicare Advantage healthcare company collects the money each month from Medicare, based on the numbers of its members. The health plan executives then decide how to distribute that money for payment of your healthcare. Usually some of the executives are also physicians. They decide, either directly or indirectly, how much your primary care physician is paid, how much your specialists are paid, and how much money a hospital receives for your care if admission is necessary. They oversee the precertification process for diagnostic studies and for many medications. The Medicare Advantage Plan administrators negotiate contracts in some cases with physicians, other providers and facilities that are not directly under their control. Usually they try to arrange care within their own network.
Any unused funds are distributed by the administrators of the plan to the managers, physicians and other providers, and employees of the Plan. Alternately, excess funds can be recorded as profit or they can be used to fund ancillary companies that might then be involved in your care. Any excess funds can also be distributed as bonuses to the directors and physicians in the plan.