Final answer:
Medicare Advantage plan bids are the amount health insurance companies submit to provide Medicare Advantage plans. The monthly capitation is the payment amount per Medicare Advantage beneficiary.
Step-by-step explanation:
Medicare Advantage plan bids are the amount that health insurance companies submit to the Centers for Medicare and Medicaid Services (CMS) to provide Medicare Advantage plans in a specific geographic area. These bids represent the projected cost of providing healthcare services to Medicare beneficiaries enrolled in the plan.
When setting the monthly capitation, CMS determines the payment amount per Medicare Advantage beneficiary based on the bids from the insurance companies. The monthly capitation payment is the amount the insurance company will receive from CMS for each Medicare Advantage enrollee.
Insurance companies that submit lower bids relative to the benchmark will receive higher monthly capitation payments, while those with higher bids will receive lower payments.