Medicare Advantage (MA)

Is Medicare Advantage the future for Medicare beneficiaries?

In 2020,  

  • 40% of Medicare beneficiaries were covered under Medicare Advantage plans.
  • About 99% will have access to at least one Medicare Advantage plan  

What is Medicare Advantage

Medicare Advantage (Medicare Part C or MA) is a type of health insurance plan that provides Medicare benefits through a private-sector health insurer; Here, the Medicare beneficiary pays a monthly premium (usually much lower than original Medicare) to a private insurance company and in return:

  • Receives coverage for inpatient hospital (“Part A”)
  • Coverage for outpatient (“Part B”) services.
  • The plan also includes prescription drug (“Part D”) coverage.
  • And a host of ancillary “fringe” additional benefits, such as dental/vision coverage or gym memberships.

By contrast, in traditional Medicare, the Medicare beneficiary pays a monthly premium to the federal government and receives coverage for Part A and Part B services, but must purchase other coverage (e.g., for prescription drugs) separately

Advantages and Disadvantages

  • Medicare Advantage plans are managed care plans, usually with limited provider networks, by contrast mostly all physicians and hospitals accept original Medicare; thus, giving beneficiaries better access
  • Both charge a premium for Part B benefits, and about 40% of Medicare Advantage enrollees with prescription drug benefits pay an additional premium.
  • Medicare Advantage plans include an annual out-of-pocket spending limit, while Original Medicare does not and is usually supplemented with a “Medigap” plan
  • Medicare Advantage plans promotes coordinated medical care. The healthcare providers (usually collocated or co-employed) actively communicate to coordinate your care between different types of healthcare services and medical specialties. This ensures you have a healthcare team and helps avoid unnecessary expense and issues like medication interactions

Original Medicare still operates in the Fee for Service world where the rendering provider/organization is reimbursed for each service performed (up to an allowed amount). Conversely the Medicare program pays Medicare Advantage insurers a monthly lump sum for each enrollee (capitation-PMPM) to cover the cost of carrying their beneficiaries, the plan is assessed (yearly) on how well they manage the assigned population -what value they have provided.

Research has consistently shown that Medicare Advantage (MA) outperforms traditional Medicare on several quality measures such as preventive screenings and avoiding hospitalizations. This can be attributed in part to the payment arrangement these plans have with CMS which includes risk-adjusted capitation payments and strong value-based care performance incentives to “enable plans to offer care management interventions that help meet the complex care needs of vulnerable beneficiaries in ways that achieve positive health outcomes.”

Conclusion

The choice is based entirely on your personal situation. When a client is comparing which option is better, (s)he must consider:

  • medical situation/status
  • monthly and yearly budget
  • preference for providers
  • other lifestyle factors that can impact care and costs
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