Medicare Advantage

Medicare Advantage (sometimes called Medicare Part C or MA) is a type of health insurance plan in the United States that provides Medicare benefits through a private-sector health insurer.[1]

In a Medicare Advantage plan, a Medicare beneficiary pays the Medicare monthly premium to the federal government, but receives coverage via a private insurance company for inpatient hospital ("Part A") and outpatient ("Part B") services. Typically, the plan also includes prescription drug ("Part D") coverage.[2] Many plans also offer additional benefits, such as dental coverage or gym memberships.[3]

By contrast, under so-called "Original Medicare", a Medicare beneficiary pays a monthly premium to the federal government and receives coverage for Part A and Part B services, but must purchase supplemental coverage to fill in the coverage gap not covered by Medicare, as well as for prescription drugs.[4]

From a beneficiary's point of view, there are several key differences between Medicare Advantage and Original Medicare. Most Medicare Advantage plans are managed care plans (e.g., PPOs or HMOs) with limited provider networks, whereas virtually every physician and hospital in the U.S. accepts Original Medicare. Both charge a premium for Part B benefits, and about 40% of Medicare Advantage enrollees with prescription drug benefits pay an additional premium.[5] Medicare Advantage plans include an annual out-of-pocket spending limit, while Original Medicare does not and is usually supplemented with a "Medigap" plan.[5]

Original Medicare and Medicare Advantage also pay healthcare providers differently. Under Original Medicare, the Medicare program typically reimburses healthcare providers with a fee for each service provided to a beneficiary. This fee is often calculated with a formula (for example, the prospective payment system for hospital services), and while providers can reject Medicare's reimbursement rates (and thus opt out of the Medicare program), they cannot bargain over the reimbursement rates. By contrast, most Medicare Advantage plans negotiate payment rates and form networks with healthcare providers, similar to how purely private health insurance plans operate. In turn, the Medicare program pays Medicare Advantage insurers a monthly lump sum for each enrollee (capitation) to cover the cost of carrying their beneficiaries.[6]

In 2020, about 40% of Medicare beneficiaries were covered under Medicare Advantage plans.[5] Nearly all Medicare beneficiaries (99%) will have access to at least one Medicare Advantage plan in 2020; the average beneficiary will have access to 33[7] plans per county in 2021. This number varies yearly as new sponsors apply to CMS and/or old ones drop out (a process that takes place between January and June of the preceding year).

Usage

The number of people using public Part C of Medicare has grown dramatically from almost zero since 1998 to 26.5 million in 2021. The top-25 Medicare Advantage insurers enroll a combined 21.6 million lives, or 87 percent of the national market. Nine of these plans saw growth over 10% this past year according to the American Association for Medicare Supplement Insurance.[8]

References

  1. ↑ "Medicare & You: 2020", p. 55. Centers for Medicare and Medicaid Services, revised December 2019. Accessed January 18, 2020. https://www.medicare.gov/pubs/pdf/10050-medicare-and-you.pdf.
  2. ↑ "Fact Sheet: Medicare Advantage". Kaiser Family Foundation, June 6, 2019. Accessed January 18, 2020. https://www.kff.org/medicare/fact-sheet/medicare-advantage/. ("Medicare Advantage plans are generally required to offer at least one plan that covers the Part D drug benefit. In 2019, 90% of Medicare Advantage plans offer prescription drug coverage, while most Medicare Advantage enrollees (88%) select this benefit.")
  3. ↑ "Medicare & You: 2020", p. 56.
  4. ↑ "Medicare & You: 2020", p. 8
  5. 1 2 3 Freed, Meredith; Damico, Anthony; Neuman, Tricia (13 January 2021). "A Dozen Facts About Medicare Advantage in 2020". KFF. Kaiser Family Foundation. Retrieved 20 June 2021.
  6. ↑ Neuman P, Jacobson GA (November 29, 2018). "Medicare Advantage Checkup". The New England Journal of Medicine. 379 (22): 2164. doi:10.1056/NEJMhpr1804089.
  7. ↑ Freed, Meredith; Damico, Anthony; 2020 (2020-10-29). "Medicare Advantage 2021 Spotlight: First Look". KFF. Retrieved 2021-11-02.{{cite web}}: CS1 maint: numeric names: authors list (link)
  8. ↑ "Medicare Advantage statistics 2021 from industry Association". MedicareSupp.org. Retrieved 2021-05-25.

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