Medicare Advantage

Last updated
Medicare.gov logo Medicare-logo.png
Medicare.gov logo

Medicare Advantage (Medicare Part C, MA) is a type of health plan offered by private companies which was established by the Balanced Budget Act (BBA) in 1997. This created a private insurance option that wraps around traditional Medicare. Medicare Advantage plans may fill some coverage gaps and offer alternative coverage options in an attempt to make them appear more attractive to the subscriber as compared to traditional Medicare.

Contents

Under Part C, Medicare pays a plan operator a fixed payment for each enrollee. The operator then pays for their medical expenses. Traditional Medicare directly compensates providers on a fee-for-service basis. [1] Plans are offered by integrated health delivery systems, labor unions, non profit charities, and health insurance companies, which may limit enrollment to specific groups of people (such as union members).[ citation needed ]

As of 2024, MA enrollees faced premium and out-of-pocket costs that were $2541 less than those in traditional Medicare. Medicare payments to insurers averaged $12,000 (2019). [2]

History

In 1997 Medicare Advantage was created as part of the 1997 BBA. [3]

MA was revised in 2003 and 2010 to incorporate a framework/bid/rebate process. [4]

MA grew from almost zero in 1998 to 33.8 million subscribers in 2024, or 55% of Medicare recipients. 98%+ were enrolled in a zero-premium MA-PD plan (including prescription drug coverage). [5]

In 2022, 295 plans (up from 256 in 2021) covered all Medicare services, plus Medicaid-covered behavioral health treatment or long term services and support. [6]

In 2022, 1000 MA plans were projected to enroll 3.7 million people in VBID. The hospice benefit will be offered by 115 Medicare Advantage plans in 22 states and territories. [6]

Coverage options

Operators are allowed to vary the things they cover from those provided by Medicare's Parts A and B as long as the result is the actuarial equivalent (coverages whose cost is equivalent) to those programs. [7] : 61 

MA plans are required to offer coverage that meets or exceeds the standards set by Medicare A and B, but do not have to cover every benefit in the same way. MA plans feature an out-of-pocket annual spending limit of the beneficiary's choosing, typically ranging from $1500 to $8000 (2023). Many MA plans with a high limit have no premium (but the enrollee must pay a Part B premium if otherwise required). Medicare Parts A and B do not include protections from high out-of-pocket costs.[ citation needed ]

MA plans may choose to pay for deductibles, include on some covered medications.

Most MA plans are managed care plans (e.g., Preferred Provider Organizations (PPO) or Health Maintenance Organizations (HMO)). Both types develop lists of providers ("networks") based on the provider's willingness to accept the plan's terms for fees and other matters. PPO's provide enrollees with In-network and out-of-network coverage, typically paying a higher fraction of costs for in-network providers. HMO's typically provide coverage only for in-network providers, except in emergencies, and in other limited circumstances. [8] [9]

MAPD plans are generally available for no additional premium, although some 40% of MAPD enrollees are in plans that chage an additional premium. [10]

Medicare expects MAPD enrollees to have maintain continuous credible prescription drug coverage after initially becoming covered under either Medicare A or B. Those who do not pay a Part D Late Enrollment Penalties (LEP). MAPD plans (including those without a premium) typically do not cover LEP.[ citation needed ]

MA enrollees must pay their full Part B Premium, unless it is paid for by their state or other low-Income assistance programs, or unless their plan has a Part B Premium Reduction (also known as a Part B Giveback). Premiums and plan availability vary by state and county and are annually subject to change.

Nearly all Medicare beneficiaries [11] have access to at least one Medicare Advantage plan; on average 39 plans per county were available in 2022. [12]

By design, Medicare's payments per Medicare Advantage enrollee and those for traditional beneficiaries should average the same by county. However, the framework/bid/rebate process keeps this relationship out of sync.

Operators

The largest operator is a hybrid: interest group AARP works with UnitedHealth. UnitedHealthCare UHC, a for-profit health Insurance company, is the Plan Operator. The AARP name is licensed to UHC. UHC offers other Medicare Advantage plans not associated with AARP.[ citation needed ]

Alternatives

Those who do not enroll in an MA plan still receive coverage for Part A and Part B services. Many purchase private Medicare Supplement Plans [10] ) to cover co-pays, co-insurance and/or deductibles. They may enroll separately in a Part D Prescription Drug Plan for coverage of prescription drugs. [7] : 8 

Other plan types, such as 1876 Cost plans, are available in some areas. Cost plans are not Medicare Advantage plans and are not capitated. Instead, beneficiaries keep their traditional Medicare benefits while the plan operator administers their Part A and Part B benefits.[ citation needed ]

Regulations

Plans must be approved by the Centers for Medicare and Medicaid Services (CMS). If a plan changes benefits, any savings must be passed along to enrollees. [13]

Coverage must include inpatient hospital (Part A) and outpatient (Part B) services. Typically, plans also include prescription drug (Part D) coverage. [14] Many plans also cover additional benefits, such as hearing, dental, or vision services not covered by Part B. Such plans typically require a higher premium. [7] : 62 

Medicare + Medicaid

Some MA plans cover both Medicare and Medicaid services for enrollees who are eligible for both. [6] Often referred to as "dual eligible", such individuals must meet specific eligibility criteria for each program. Medicare is typically available to those aged 65 and older, certain individuals with disabilities, and those with end-stage renal disease or ALS. [15] Medicaid eligibility is income and asset-based, varies by state, and is generally available to low-income individuals. [16]

Value-based Insurance Design

The CMS Innovation Center's Medicare Advantage Value-Based Insurance Design (VBID) model tests customized benefits that are designed to better manage disease and address social needs, including food insecurity and social isolation. The VBID Hospice Benefit Component provides access to palliative/hospice services. [6]

Criticisms

In 2019, MA operators denied 13% of prior authorization requests that would have been accepted under traditional Medicare. [17] In 2019 alone, MA plans cost tax-payers $9 billion more than if those enrollees were in traditional Medicare. [18]

Given that operators are compensated based on enrollee-specific risk scores, operators been accused of manipulating diagnosis codes to increase risk ratings and thus their compensation. [18] Most large operators including UnitedHealth, Humana, Elevance, and Kaiser have faced or are facing federal fraud charges by the Inspector General or the Department of Justice. [19] A 2024 analysis based on Medicare data reported evidence of such behavior. The patients often received no treatment for those diagnoses. The analysis calculated that in the three years ending in 2021, insurers pocketed $50 billion from Medicare for untreated diseases. [20]

Related Research Articles

<span class="mw-page-title-main">Medicaid</span> United States social health care program for families and individuals with limited resources

In the United States, Medicaid is a government program that provides health insurance for adults and children with limited income and resources. The program is partially funded and primarily managed by state governments, which also have wide latitude in determining eligibility and benefits, but the federal government sets baseline standards for state Medicaid programs and provides a significant portion of their funding. States are not required to participate in the program, although all have since 1982.

<span class="mw-page-title-main">Medicare (United States)</span> US government health insurance program

Medicare is a federal health insurance program in the United States for people age 65 or older and younger people with disabilities, including those with end stage renal disease and amyotrophic lateral sclerosis. It was begun in 1965 under the Social Security Administration and is now administered by the Centers for Medicare and Medicaid Services (CMS).

<span class="mw-page-title-main">Medicare Prescription Drug, Improvement, and Modernization Act</span>

The Medicare Prescription Drug, Improvement, and Modernization Act, also called the Medicare Modernization Act or MMA, is a federal law of the United States, enacted in 2003. It produced the largest overhaul of Medicare in the public health program's 38-year history.

Health insurance or medical insurance is a type of insurance that covers the whole or a part of the risk of a person incurring medical expenses. As with other types of insurance, risk is shared among many individuals. By estimating the overall risk of health risk and health system expenses over the risk pool, an insurer can develop a routine finance structure, such as a monthly premium or payroll tax, to provide the money to pay for the health care benefits specified in the insurance agreement. The benefit is administered by a central organization, such as a government agency, private business, or not-for-profit entity.

<span class="mw-page-title-main">Health Net</span> American health care insurance provider

Health Net, LLC, a subsidiary of Centene, is an American health care insurance provider. Health Net and its subsidiaries provide health plans for individuals, families, businesses and people with Medicare and Medicaid, as well as commercial, small business, and affordable care insurance.

The term managed care or managed healthcare is used in the United States to describe a group of activities intended to reduce the cost of providing health care and providing American health insurance while improving the quality of that care. It has become the predominant system of delivering and receiving American health care since its implementation in the early 1980s, and has been largely unaffected by the Affordable Care Act of 2010.

...intended to reduce unnecessary health care costs through a variety of mechanisms, including: economic incentives for physicians and patients to select less costly forms of care; programs for reviewing the medical necessity of specific services; increased beneficiary cost sharing; controls on inpatient admissions and lengths of stay; the establishment of cost-sharing incentives for outpatient surgery; selective contracting with health care providers; and the intensive management of high-cost health care cases. The programs may be provided in a variety of settings, such as Health Maintenance Organizations and Preferred Provider Organizations.

Dual-eligible beneficiaries refers to those qualifying for both Medicare and Medicaid benefits. In the United States, approximately 9.2 million people are eligible for "dual" status. Dual-eligibles make up 14% of Medicaid enrollment, yet they are responsible for approximately 36% of Medicaid expenditures. Similarly, duals total 20% of Medicare enrollment, and spend 31% of Medicare dollars. Dual-eligibles are often in poorer health and require more care compared with other Medicare and Medicaid beneficiaries.

<span class="mw-page-title-main">Medicare Part D</span> United States prescription drug benefit for the elderly and disabled

Medicare Part D, also called the Medicare prescription drug benefit, is an optional United States federal-government program to help Medicare beneficiaries pay for self-administered prescription drugs. Part D was enacted as part of the Medicare Modernization Act of 2003 and went into effect on January 1, 2006. Under the program, drug benefits are provided by private insurance plans that receive premiums from both enrollees and the government. Part D plans typically pay most of the cost for prescriptions filled by their enrollees. However, plans are later reimbursed for much of this cost through rebates paid by manufacturers and pharmacies.

Medigap refers to various private health insurance plans sold to supplement Medicare in the United States. Medigap insurance provides coverage for many of the co-pays and some of the co-insurance related to Medicare-covered hospital, skilled nursing facility, home health care, ambulance, durable medical equipment, and doctor charges. Medigap's name is derived from the notion that it exists to cover the difference or "gap" between the expenses reimbursed to providers by Medicare Parts A and B for services and the total amount allowed to be charged for those services by the United States Centers for Medicare and Medicaid Services (CMS).

The prices of health care in the United States are higher than in other countries. Compared to other OECD countries, U.S. healthcare costs are one-third higher or more relative to the size of the economy (GDP). According to the CDC, during 2015, health expenditures per-person were nearly $10,000 on average, with total expenditures of $3.2 trillion or 17.8% of GDP. Proximate reasons for the differences with other countries include higher prices for the same services and greater use of healthcare. Higher administrative costs, higher per-capita income, and less government intervention to drive down prices are deeper causes. While the annual inflation rate in healthcare costs has declined in recent decades, it still remains above the rate of economic growth, resulting in a steady increase in healthcare expenditures relative to GDP from 6% in 1970 to nearly 18% in 2015.

The Medicare Part D coverage gap was a period of consumer payments for prescription medication costs that lay between the initial coverage limit and the catastrophic coverage threshold when the consumer was a member of a Medicare Part D prescription-drug program administered by the United States federal government. The gap was reached after a shared insurer payment - consumer payment for all covered prescription drugs reached a government-set amount, and was left only after the consumer had paid full, unshared costs of an additional amount for the same prescriptions. Upon entering the gap, the prescription payments to date were re-set to $0 and continued until the maximum amount of the gap was reached or the then current annual period lapses. In calculating whether the maximum amount of gap had been reached, the "True-out-of-pocket" costs (TrOOP) were added together.

In the United States, health insurance helps pay for medical expenses through privately purchased insurance, social insurance, or a social welfare program funded by the government. Synonyms for this usage include "health coverage", "health care coverage", and "health benefits". In a more technical sense, the term "health insurance" is used to describe any form of insurance providing protection against the costs of medical services. This usage includes both private insurance programs and social insurance programs such as Medicare, which pools resources and spreads the financial risk associated with major medical expenses across the entire population to protect everyone, as well as social welfare programs like Medicaid and the Children's Health Insurance Program, which both provide assistance to people who cannot afford health coverage.

<span class="mw-page-title-main">SCAN Health Plan</span>

SCAN Health Plan (SCAN) is a not-for-profit, Medicare Advantage based in Long Beach, California. Founded in 1977, SCAN provides healthcare coverage to Medicare beneficiaries in California, Arizona, Texas and Nevada, serving more than 285,000 members. It is one of the largest not-for-profit Medicare Advantage plans in the country. SCAN Health Plan is part of SCAN Group.

Medicaid managed care Medicaid and additional services in the United States through an arrangement between a state Medicaid agency and managed care organizations (MCOs) that accept a set payment – "capitation" – for these services. As of 2014, 26 states have contracts with MCOs to deliver long-term care for the elderly and individuals with disabilities. There are two main forms of Medicaid managed care, "risk-based MCOs" and "primary care case management (PCCM)."

The Empowering Patients First Act is legislation sponsored by Rep. Tom Price, first introduced as H.R. 3400 in the 111th Congress. The bill was initially intended to be a Republican alternative to the America's Affordable Health Choices Act of 2009, but has since been positioned as a potential replacement to the Patient Protection and Affordable Care Act (PPACA). The bill was introduced in the 112th Congress as H.R. 3000, and in the 113th Congress as H.R. 2300. As of October 2014, the bill has 58 cosponsors. An identical version of the bill has been introduced in the Senate by Senator John McCain as S. 1851.

Health care finance in the United States discusses how Americans obtain and pay for their healthcare, and why U.S. healthcare costs are the highest in the world based on various measures.

In the United States, a preferred pharmacy network is a group of pharmacies that involves a prescription drug plan that selects a group of preferred pharmacies, which likely include pharmacies willing to give the plans a larger discount than other pharmacies. Consumers are then able to choose between preferred or non-preferred pharmacies. Those who choose the preferred pharmacies then save money in the form of lower copayment.

The Affordable Care Act (ACA) is divided into 10 titles and contains provisions that became effective immediately, 90 days after enactment, and six months after enactment, as well as provisions phased in through to 2020. Below are some of the key provisions of the ACA. For simplicity, the amendments in the Health Care and Education Reconciliation Act of 2010 are integrated into this timeline.

Value-based insurance design is a demand-side approach to health policy reform. V-BID generally refers to health insurers' efforts to structure enrollee cost-sharing and other health plan design elements to encourage enrollees to consume high-value clinical services – those that have the greatest potential to positively impact enrollee health. V-BID also discourages the use of low-value clinical services – when benefits do not justify the cost. V-BID aims to increase health care quality and decrease costs by using financial incentives to promote cost efficient health care services and consumer choices. V-BID health insurance plans are designed with the tenets of "clinical nuance" in mind. These tenets recognize that medical services differ in the amount of health produced, and the clinical benefit derived from a specific service depends on the consumer using it, as well as when and where the service is provided.

<span class="mw-page-title-main">Elijah Cummings Lower Drug Costs Now Act</span> Proposed legislation

The Elijah Cummings Lower Drug Costs Now Act is proposed legislation in the 117th United States Congress. The bill is designed to lower prescription drug costs in the United States. Notably, the law gives the federal government the power to negotiate prescription drug prices. The legislation takes the name of late Maryland Representative Elijah Cummings.

References

  1. ↑ "The Prices That Commercial Health Insurers and Medicare Pay for Hospitals' and Physicians' Services". CBO. 2022-01-20. Retrieved 2022-10-12.
  2. ↑ "Medicare Advantage: A Policy Primer". www.commonwealthfund.org. 2024-01-31. Retrieved 2024-12-12.
  3. ↑ Bailey, Victoria (2023-05-22). "The History of Medicare Advantage: From Inception to Growing Popularity". Xtelligent. Retrieved 2024-11-20.
  4. ↑ Biles, Brian; Guterman, Steve; Adrion, Emily (September 2008). "The Continuing Cost of Privatization: Extra Payments to Medicare Advantage". Commonwealth Fund. Archived from the original on April 1, 2012.
  5. ↑ Better Medicare Alliance (2024). "State of Medicare Advantage" (PDF).
  6. 1 2 3 4 "CMS Releases 2022 Premiums and Cost-Sharing Information for Medicare Advantage and Prescription Drug Plans | CMS". cms.gov. Retrieved 2022-10-19.
  7. 1 2 3 "Medicare & You: 2024" (PDF). Centers for Medicare and Medicaid Services. Retrieved April 1, 2024.
  8. ↑ Trish, Erin; Ginsburg, Paul (2017-09-05). "Physician Reimbursement in Medicare Advantage Compared With Traditional Medicare and Commercial Health Insurance". JAMA Internal Medicine. 177 (9): 1287–1295. doi:10.1001/jamainternmed.2017.2679. PMC   5710575 . PMID   28692718.
  9. ↑ Neuman P, Jacobson GA (November 29, 2018). "Medicare Advantage Checkup". The New England Journal of Medicine. 379 (22): 2164. doi:10.1056/NEJMhpr1804089. PMID   30428276. S2CID   53424941.
  10. 1 2 Freed, Meredith; Damico, Anthony; Neuman, Tricia (13 January 2021). "A Dozen Facts About Medicare Advantage in 2020". KFF. Kaiser Family Foundation. Archived from the original on June 27, 2021. Retrieved 20 June 2021.
  11. ↑ Spencer, Mark (2022-12-10). "What is the difference between Original Medicare and Medicare Advantage plans". Medicare Help. Retrieved 2022-10-12.
  12. ↑ Freed, Meredith; Damico, Anthony (2022-11-02). "Medicare Advantage 2022 Spotlight: First Look". KFF. Retrieved 2021-10-02.
  13. ↑ "What is Medicare Part C?". hhs.gov. June 7, 2015.
  14. ↑ "Fact Sheet: Medicare Advantage". Kaiser Family Foundation. June 6, 2019. Archived from the original on February 22, 2020. Retrieved January 18, 2020. Medicare Advantage plans are generally required to offer at least one plan that covers the Part D drug benefit. The typical reasons for not choosing a Part C plan with Part D integrated is if a beneficiary receives drug coverage from the VA or a former employer. In 2023, about 90% of Medicare Advantage plans offer prescription drug coverage, while most Medicare Advantage enrollees (88%) select this benefit.
  15. ↑ "Get started with Medicare". medicare.gov. Retrieved 2023-09-14.
  16. ↑ "Medicaid Eligibility | Medicaid". medicaid.gov. Retrieved 2023-09-14.
  17. ↑ Grimm, Christi (April 2022). "Some Medicare Advantage Organization Denials of Prior Authorization Requests Raise Concerns About Beneficiary Access to Medically Necessary Care" (PDF).
  18. 1 2 "The Medicare Advantage program: Status report" (PDF). March 2021.
  19. ↑ Abelson, Reed; Sanger-Katz, Margot (2022-10-08). "'The Cash Monster Was Insatiable': How Insurers Exploited Medicare for Billions". The New York Times. ISSN   0362-4331. Archived from the original on 2023-01-20. Retrieved 2024-07-08.
  20. ↑ "Insurers Pocketed $50 Billion From Medicare for Diseases No Doctor Treated". Wall Street Journal. July 8, 2024.
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.