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Medicare Advantage

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Medicare Advantage (Medicare Part C, MA) is a type of health plan offered by Medicare-approved private companies that must follow rules set by Medicare. Most Medicare Advantage Plans include drug coverage (Part D). Under Part C, Medicare pays a sponsor a fixed payment. The sponsor then pays for the health care expenses of enrollees. Sponsors are allowed to vary the benefits from those provided by Medicare's Parts A and B as long as they provide the actuarial equivalent of those programs.[1]: 61  The sponsors vary from primarily integrated health delivery systems to unions to other types of non profit charities to insurance companies.

The largest sponsor is a hybrid: the non-profit interest group AARP using UnitedHealth. In this hybrid arrangement, UnitedHealthcare, which is a for-profit Health Insurance Company, is the actual Plan Sponsor for the Medicare Advantage Plans bearing the AARP name. The AARP name is simply licensed to UnitedHealthcare (UHC) for them to use on their Medicare Advantage Plans. This is largely a partnership for marketing purposes only. AARP is not involved in the administration of the Medicare Advantage Plans issued by UHC. UHC also offers other Medicare Advantage Plans that do not have the AARP name attached to them. UHC offers both Medicare Supplements and Stand-Alone Prescription Drug Plans (Part D) in addition to Medicare Advantage Plans (most, if not all, of these are co-branded with the AARP name, as well).

Part C plans are required to offer coverage that meets or exceeds the standards set by Medicare Parts A and B, but they do not have to cover every benefit in the same way (actuarial equivalence is required). The major advantage of a public Part C Medicare Advantage plan is that each features an out of pocket annual spend limit of the beneficiary's choosing, typically ranging from $1500 to about $8000 in 2023. The lower the limit the higher the premium as with insurance of all types. Many Part C plans with a high limit have no premium (but the Part C enrollee still has to pay a Part B premium if otherwise required). Original Medicare Parts A and B do not include such out of pocket spend limit protection.

Plans must be approved by the Centers for Medicare and Medicaid Services (CMS). If a MA plan changes some benefits, the savings must be passed along to consumers by lowering co-payments for doctor visits (or any other plus or minus aggregation approved by CMS).[2] Coverage must include inpatient hospital (Part A) and outpatient (Part B) services. Typically, the plan also includes prescription drug (Part D) coverage.[3] Many plans also offer additional benefits, such as hearing or dental coverage or vision services not covered by Part B of Medicare. Such plans typically require a higher premium.[1]: 62 

Those who do not enroll in a Part C Medicare Advantage plan will still receive their coverage for Part A and Part B services through Original Medicare, that is if they are entitled to Part A and do not refuse a/or turn down enrollment into Part B coverage. Many of these Medicare beneficiaries will purchase private supplemental coverage (known as Medigap)[4] (Medigap plans are also commonly known as Medicare Supplement Plans) to cover the co-pays, co-insurance and/or deductibles in Original Medicare Parts A and B. These beneficiaries must enroll separately in a Part D Prescription Drug Plan (PDP) in order to obtain coverage for prescription drugs.[1]: 8  Part C Medicare Advantage Plans are broken into two main categories: those that do include Prescription Drug Coverage (MAPD's) and those that do not include Prescription Drug Coverage (MA's or MA-only plans). Part C Medicare Advantage plans include co-pays and co-insurance for services received, and typically have either no deductibles -or- only have deductibles for certain services. Historically, many Medicare Advantage Plans (either MA's or MAPD's) did not have a Medical Deductible, however, recently more Medicare Advantage Plans, particularly those that give either a Part B Premium Reduction, or a large amount of additional benefits, not covered by Original Medicare, have begun to adopt a Medical Deductible for certain Part B Medical services, if received during the calendar year. Additionally, some Medicare Advantage plans that include Drug Coverage (MAPD's) do have a Prescription Deductible on some or all tiers of covered medications. There are still currently some MAPD plans (issued in 2024) that do not have a Prescription Deductible. There are also still currently available (in 2024) many MAPD & MA Plans which do not have a Medical Deductible, either. It is important to thoroughly evaluate all of the benefits and coverage details of any Medicare Plan you are intending to join. It is typically helpful to consult a local Licensed Independent Insurance Broker who specializes in Medicare Plans to receive assistance in determining what plans are available in your area. They can typically also help you evaluate what your coverage needs are and make recommendations that you may find suitable.

Most MA/MAPD plans are managed care plans (e.g., PPOs or HMOs) with limited provider networks. PPO's provide members with In-Network and Out-of-Network Benefits, though members typically pay a higher cost-share when receiving care from Out-of-Network Providers. HMO's typically only provide benefits when members use In-Network Providers, except in the case of an emergency, and sometimes in other limited situations/circumstances.

About 40% of Medicare Advantage enrollees with prescription drug benefits pay an additional premium.[4] In 2024, some Medicare Advantage Plans with Prescription Drug Coverage (MAPD) are still available for no additional Premium(s). Although, members who have a Part D Late Enrollment Penalty (LEP) will pay the Penalty, even if they join a MAPD Plan with no Premium. An LEP is generally assessed if a Medicare beneficiary did not have continuous Creditable prescription drug coverage after the date they initially became covered under either Pt. A or Pt. B of Medicare, up until the point at which they join a Medicare Plan that includes Drug Coverage.

MA/MAPD Members also still have to 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 Pt. B Giveback). However, Plan Premiums and Plan availability varies by State and County. They also are subject to change annually. www.Medicare.Gov is the Official website of Medicare and Lists all of the MA, MAPD, and PDP Plans available in any given Zip Code and County in the US.

Original Medicare and Medicare Advantage pay healthcare providers differently. Original Medicare typically reimburses healthcare providers with a fee for each service.[5] This fee is often calculated with a standard formula (for example, the prospective payment system for hospital services). Providers either accept Medicare's reimbursement rates or opt out of the program.[5] Private Medicare Advantage plans negotiate payment rates and form networks with healthcare providers, similar to private health insurance plans that almost all Americans not of Medicare age use.[6][7]

As of 2023, about 50% of Medicare beneficiaries were members of Medicare Advantage plans.[8] Nearly all Medicare beneficiaries[9] have access to at least one Medicare Advantage plan; on average 39[10] plans per county were available. By design, the cost to the trust funds of Medicare Advantage plan members and those beneficiaries receiving services on a fee basis should be the same by county. However the convoluted framework/bid/rebate process built into the 2003 and 2010 revisions to the 1997 Medicare Advantage law means this one-one relationship will always be out of sync. On average, over the 25 years of the program comparable people on both programs (that is, for example, people not on Medicaid or Federal retirees or people still working or in the VA system or in union plans) have costs the Trust Funds equal amounts .[11]

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 Original Medicare benefits while the plan sponsor administers their Part A and Part B benefits.

Medicare + Medicaid

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Some MA plans cover both Medicare and Medicaid services for people who are eligible for both.[12] To be eligible both Medicare and Medicaid coverage, often referred to as "dual eligibility," individuals must meet specific eligibility criteria for each program separately. Medicare is typically available to those aged 65 and older, certain individuals with disabilities, and those with end-stage renal disease or ALS.[13] Medicaid eligibility is income and asset-based, varying by state, and is generally available to low-income individuals.[14]

Value-based Insurance Design

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The CMS Innovation Center's Medicare Advantage Value-Based Insurance Design (VBID) model tests the effect of offering customized benefits that are designed to better manage their disease(s) and address social needs, including food insecurity and social isolation. The VBID Hospice Benefit Component provides access to palliative/hospice services.[12]

Usage

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The number of people using public Part C of Medicare grew from almost zero since 1998 to 26.5 million in 2021. The top-25 Medicare Advantage insurers enroll a combined 21.6 million people, or 87 percent of the total. Nine plans saw growth over 10% in 2021.[15]

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.[12]

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.[12]

Criticisms

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In 2019, Medicare Advantage Organizations denied 13% of prior authorization requests that would have been accepted if the beneficiaries were in original Medicare.[16] In 2019 alone, Medicare Advantage plans cost tax-payers $9 billion more dollars than if beneficiaries were in original Medicare.[17] This is due to a financial incentive for insurance companies associated with these plans to manipulate diagnosis codes.[17] In addition, while original Medicare allows for beneficiaries to visit any provider that accepts Medicare, most Medicare Advantage plans restrict the number of providers and hospitals that beneficiaries can visit.[18]

As a result of labeling beneficiaries with more severe diagnoses as a way to generate profit, many companies that participate in MA plans such as UnitedHealth, Humana, Elevance, and Kaiser have or are facing federal fraud lawsuits from the Department of Justice.[19]

A Wall Street Journal analysis in July 2024 concluded that private insurers made dubious diagnoses in their clients in order to trigger large payments from the government's Medicare Advantage program. The patients often did not receive any treatment for those insurer-added diagnoses. The report, based on Medicare data obtained from the federal government under a research agreement, calculated that in the three years ending 2021, insurers pocketed $50 billion from Medicare for diseases no doctor treated.[20] Several estimates of Medicare Advantage overbilling by private insurers reach the budgets of major government agencies like the FBI or the US Customs and Border Protection, and most large private insurers in the Medicare Advantage program have been accused of fraud in court or by the Office of Inspector General.[21]

References

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  1. ^ a b c "Medicare & You: 2024" (PDF). Centers for Medicare and Medicaid Services. Retrieved April 1, 2024.
  2. ^ "What is Medicare Part C?". hhs.gov. June 7, 2015.
  3. ^ "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.
  4. ^ a b 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.
  5. ^ a b "The Prices That Commercial Health Insurers and Medicare Pay for Hospitals' and Physicians' Services". CBO. 2022-01-20. Retrieved 2022-10-12.
  6. ^ 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.
  7. ^ 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.
  8. ^ Freed, Meredith; Damico, Anthony (2022-12-10). "Medicare Advantage in 2022 Enrollment Update and Key Trends". KFF. Retrieved 2022-10-11.
  9. ^ Spencer, Mark (2022-12-10). "What is the difference between Original Medicare and Medicare Advantage plans". Medicare Help. Retrieved 2022-10-12.
  10. ^ Freed, Meredith; Damico, Anthony (2022-11-02). "Medicare Advantage 2022 Spotlight: First Look". KFF. Retrieved 2021-10-02.
  11. ^ 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.
  12. ^ a b c d "CMS Releases 2022 Premiums and Cost-Sharing Information for Medicare Advantage and Prescription Drug Plans | CMS". cms.gov. Retrieved 2022-10-19.
  13. ^ "Get started with Medicare". medicare.gov. Retrieved 2023-09-14.
  14. ^ "Medicaid Eligibility | Medicaid". medicaid.gov. Retrieved 2023-09-14.
  15. ^ "Medicare Advantage statistics 2021 from industry Association". MedicareSupp.org. Retrieved 2021-05-25.
  16. ^ Grimm, Christi (April 2022). "Some Medicare Advantage Organization Denials of Prior Authorization Requests Raise Concerns About Beneficiary Access to Medically Necessary Care" (PDF).
  17. ^ a b "The Medicare Advantage program: Status report" (PDF). March 2021.
  18. ^ "Medicare Advantage: How Robust Are Plans' Physician Networks?". October 2017.
  19. ^ Abelson, Reed; Sanger-Katz, Margot (October 8, 2022). "'The Cash Monster Was Insatiable': How Insurers Exploited Medicare for Billions". The New York Times.
  20. ^ "Insurers Pocketed $50 Billion From Medicare for Diseases No Doctor Treated". Wall Street Journal. July 8, 2024.
  21. ^ 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. Retrieved 2024-07-08.
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