Do You Know About the Recent Changes to Medicare Advantage?
Medicare Advantage (MA, or Medicare Part C) plans are a private insurance option in lieu of Original Medicare. By law, MA plans must offer the same benefits as Original Medicare (Parts A and B). They may provide additional coverage, such as vision, hearing, dental and even health and wellness programs. And, these plans can provide Medicare prescription drug coverage (Part D)
MA plan enrollment has increased by 5.6 million (50 percent) since the Affordable Care Act (ACA) was enacted. As of March 2015, 31 percent of all Medicare recipients were enrolled in an MA plan. As of June 30, 2015, there were 16.8 million MA beneficiaries, 31 percent of the entire Medicare population. According to the Kaiser Family Foundation (KFF), a nonprofit healthcare organization, there are a wave of changes affecting MA pricing and plan availability. As such, it’s important that current and new members note the plan changes revealed in the KFF’s study, as 2016 begins.
New Predictions for Medicare Advantage in 2017
In September 2016, the Centers for Medicare & Medicaid Services (CMS) announced that Medicare recipients would benefit from increased access to Medicare Advantage plans. Across the county, 99 percent of enrollees now have access to an Advantage plan. The CMS fact sheet also noted that in 2017:
- More than 94 percent of Medicare beneficiaries can enroll in an Advantage plan with a zero-dollar premium.
The number of Advantage options per county will remain largely unchanged since 2016 while access to supplemental coverage, like vision and dental care, will continue to increase.
Medicare Advantage premiums will have decreased by 13 percent compared to rates in 2010.
- Enrollment in Medicare Advantage will have increased by over 60 percent since 2010. This represents an all-time high of 18.5 million Advantage enrollees and about 32 percent of Medicare enrollees overall.
Certain steps taken by Medicare continues to improve access and quality across the board, especially for those who enroll in Medicare Advantage plans. Under the ACA, at least 85 percent of premiums from Advantage plans must be spent on quality and care delivery rather than overhead or administrative costs. This ensures that members benefit from careful consideration of their plan dollars. Medicare recipients can also take advantage of a one-time switch per calendar year to a 5-star rated Medicare Advantage plan in their area. Low-rated plans have an icon indicating poor performance, which helps members choose plans with confidence.
Going forward for next year and beyond, measures will be taken to improve the rating system for MA plans, leading to greater accuracy in plan ratings. Furthermore, 2017 payment reforms will ensure that payments made to MA plans are more precise.
In September, the CMS also announced that average monthly premium rates for Medicare Advantage members would drop by about 4 percent. Last year, the average monthly premium for MA beneficiaries was $32.59. In 2017, that rate will go down to $31.40. Most Medicare Advantage enrollees – 67 percent – will see no premium increase for 2017.
Recent Developments in Medicare Advantage Plans
There were several developments in Medicare Advantage plans in 2016 for the 2017 season. Among them were increased access to plans around the country, changes in Part D premiums, higher deductibles for prescription drug coverage, higher out-of-pocket limits and proposed mergers between several of the nation’s largest insurers.
- Rising plan availability. In 2016, there were about 3 percent more MA plans than there were in 2015. The number of plans will stay about the same for 2017. Americans living in metropolitan areas had access to an average of 19 plans last year, while people outside those areas had access to 11. The number of companies offering these plans has changed in recent years. An average of six companies offered coverage last year, but nationwide, just three or fewer companies offered plans. The top 25 percent offered eight or more plans. Health Maintenance Organizations (HMOs) grew last year, representing more than two-thirds of plans. Preferred Provider Organizations (PPOs) and other options continued to be stable in 2016.
- Increases in Part D premiums. For MA-provided drug coverage, the average monthly premium fell slightly in 2016. HMO costs rose approximately 9 percent to $31 per month while local PPOs rose 8 percent to $68. But zero-cost prescription drug plan coverage also increased in 2016, with 81 percent of all participants having access, compared to 79 percent in 2015.
- Increases in Part D deductibles. In 2010, 90 percent of MA plans had no deductibles, but in 2016, this fell to 55 percent. The average deductible in 2015 was $90 a month; in 2016, it was $118 and 16 percent of all plans charged the maximum $360 deductible. The max deductible in 2017 is now $400.00 a year. People receiving drug coverage through MA plans are more likely to pay a $0 deductible; for stand-alone Part D plans, only a third of plans charge no deductible.
- Out-of-pocket limits should increase. In 2017, MA plans had an out-of-pocket maximum of $6,700 for spending on hospital and medical services, but the average out-of-pocket maximum for most plans in 2016 was $5,400. Thirty-nine percent of plans charge the maximum in 2016 compared to 34 percent in 2015. Only 23 percent of plans charged $3,400 or less in out-of-pocket maximums in 2016, down from 30 percent in 2015.
- Carriers cater to certain members. Among carriers, about half of all Humana plans are HMOs while 84 percent of all UnitedHealth plans are HMOs. The industry’s potential mergers may further change the MA program as well.
Everything you need to know about Medicare Advantage
Medicare Advantage is a managed health care plan that acts as an alternative to original Medicare. Medicare is offered to people aged 65 or older who have met the working credit requirements by paying into the Medicare system through payroll deductions. People who are under the age of 65 with certain disabilities and people of all ages with Lou Gehrig’s disease (ALS) or end-stage renal disease (permanent kidney failure requiring dialysis or a kidney transplant) also qualify for Medicare. Most people who qualify for traditional Medicare can utilize Medicare Advantage plans instead of original Medicare (Parts A and B).
United States citizens and legal residents who have resided in the U.S. for at least five years usually receive Part A (hospital insurance) without any additional cost. Part A is also generally provided without any additional cost to U.S. citizens and legal residents who are fully insured under the Social Security Administration program. Some people do have to pay for Part A coverage, but this portion of Medicare is typically referred to as “premium-free Part A.”
Medicare beneficiaries have been receiving Medicare benefits through private health insurance plans since the 1970s. However, it was the Balanced Budget Act of 1997 that named the managed care program “Medicare+Choice” or “Part C.” Upon the passing of the Medicare Prescription Drug, Improvement and Modernization of the Act of 2003, the program became known as Medicare Advantage. Prescription drug coverage was also added.
Medicare Advantage benefits
Original Medicare and Medicare Advantage offer two benefit options: Part A and Part B. Part A pays for hospital services. Whereas most people don’t have to pay for Part A, enrollees are required to pay for Part B coverage. Part B pays for medical services, such as doctor visits, outpatient treatments, diagnostic testing, lab services and durable medical equipment, among other benefits.
The Centers for Medicare & Medicaid Services (CMS) processes all original Medicare claims. Private health insurance companies offer and manage Medicare Advantage plans. They receive financial compensation from the federal government to help offset healthcare costs, and the government oversees certain aspects of Advantage plans to make sure that they adhere to Medicare standards. Medicare Advantage claims are not processed through the CMS; the health insurance company processes the claim for their enrollees.
Medicare Advantage plans usually include a Part D benefit that provides prescription drug coverage. Enrollees of Medicare Advantage programs typically pay a small copayment, which could be as low as $20 per visit. Copayments may be higher when visiting a specialist. With original Medicare, coinsurance remains at 20 percent.
Insurance providers that offer Medicare Advantage plans usually offer healthcare services that are equivalent to, or even exceed, the services offered under original Medicare. Plans may also differ slightly from original Medicare. Medicare plans are designed to specifically reduce out-of-pocket expenses when visiting a physician or seeking healthcare services. Medicare Advantage plans may offer expanded benefits, such as:
- Other healthcare benefits that are not covered by original Medicare
Medicare Advantage plans usually have lower annual deductibles. An annual deductible is the amount that you have to pay out of pocket in a year before your healthcare plan pays its portion of the bill. Advantage plans don’t always charge a deductible, but some plans charge a deductible of more than $1,000 a year for out-of-network providers. When signing up for a plan, make sure you understand the costs involved ahead of time, especially if your usual doctor is out of network.
Medicare Advantage plans come in different sizes and shapes, and each type of plan has different rules and requirements. For instance, individuals who are enrolled in a Medicare Advantage HMO are unable to utilize the services of healthcare specialists or out-of-network providers without first obtaining authorization. If you’re enrolled in a Medicare Advantage PPO plan, then you can visit any physician or hospital without the need for authorization.
Medicare Advantage Plans
There are several types of Medicare Advantage plans, including: Health Maintenance Organizations (HMO), Preferred Provider Organizations (PPOs), Private Fee-for-Service Plans (PFFS), Special Needs Plans (SNPs) and Medicare Medical Savings Account Plans (MSAs).
Health Maintenance Organization (HMO) plans
Medicare HMOs have a network of participating providers. These plans usually negotiate fees with providers, and enrollees are required to use the providers within the network or pay higher cost sharing expenses for out-of-network services. Enrollees are also required to choose a primary care physician, and in most cases, you’ll need to obtain a referral to see a specialist. Referrals are not required for services like yearly mammogram screenings. If medical care is received outside of the plan’s network, you may be required to pay the full cost. Following the plan’s rules is essential to avoiding high medical costs.
Preferred Provider Organization (PPO) plans
PPO plans are a type of Medicare Advantage Plan (Part C) offered by a private health insurance carrier. With a PPO plan, you pay less if you use doctors, hospital and healthcare providers within the plan’s network. You have additional costs if these services are provided by a medical professional outside of the network.
Unlike in an HMO, enrollees in a PPO plan can usually obtain medical services from any doctor, hospital or health provider that is not a part of the network. This plan is much more flexible than an HMO plan. Prescription drugs are usually covered under PPOs as well. Enrollees are not required to choose a primary care physician, nor are they required to obtain a referral. PPO plans typically offer a variety of extra benefits, but there are usually extra fees charged to compensate.
Private Fees-for-Services (PFFS) Plans
PFFS plans generally don’t have provider networks. They usually pay for Medicare coverage services using Medicare’s fee schedules. Enrollees may use any provider that is willing to accept the plan’s payment. As an enrollee in a PFFS plan, you’re not required to have a primary care physician, and you don’t need a referral to see a specialist. However, you may be required to pay a copayment or coinsurance when seeking medical services under a PFFS plan.
Special Needs Plans (SNP)
An SNP is a type of Medicare Advantage plan that is limited to people with specific diseases or illnesses. Benefits are usually tailored to meet the medical needs of these individuals. Doctors and hospitals within the Medicare SNP network, with the exception of medical emergencies, generally provide care and services. All SNPs cover prescription drugs.
Enrollees are usually required to have a primary care physician, and referrals are required to see a specialist. However, referrals are not required on certain services, such as Pap smears or pelvic exams. Membership in a Special Needs Plans is limited to the following groups:
- Those who live in certain institutions, like nursing homes
- People who qualify for Medicare and Medicaid (dual eligibility)
- Individuals with specific disabling conditions, such as ALS, diabetes or end-stage renal disease; HIV and AIDS; or chronic heart failure
Medical Savings Accounts (MSA) Plan
An MSA plan is similar to a health savings account. It combines a high-deductible plan with a medical savings account. The high-deductible plan will only provide health coverage when you have met your annual deductible, which is typically much higher than a deductible would be with other kinds of plans. The medical savings account deposits money into your savings account. You can then decide how funds will be distributed to cover medical expenses. Some plans will offer extra benefits, such as dental services or prescription drugs.
It’s important to remember that Medicare Advantage plans cover at least the same services that are offered by Medicare Part A and Part B (original Medicare). In order to understand what Advantage plans cover, you need to know what Parts A and B cover. Here’s a snapshot:
Medicare Part A coverage
Medicare Part A generally covers hospital services, including inpatient stays and other related types of treatment and care. The following additional services are also usually covered:
- Hospital care
- Skilled nursing facility care
- Home health services
- Nursing home care
Hospice care is not covered under any Medicare Advantage plan. It’s the one exception to the rule that Advantage plans have to cover the same services as original Medicare. It’s recommended that you sign up for Medicare Part A, which is free if you have paid payroll taxes for the last 10 years, to cover any hospice care costs that you may incur.
Medicare Part B coverage
Medicare Part B is the medical insurance portion of Medicare, which includes medically necessary services and preventive care. Anything that your doctor determines is medically necessary – ranging from lab testing to durable medical equipment and more – should be covered by Medicare Part B. Examples of covered services include:
- Clinical research
- Ambulance service
- Second opinions before surgery
- Outpatient prescription drugs
- Mental health care
What is not usually covered by Part A and Part B?
Original Medicare doesn’t cover everything. For some enrollees, traditional Medicare isn’t enough, which is where Medicare Advantage comes in. Here are a few services that aren’t covered by Parts A and B that may be covered by an Advantage plan:
- Long-term care (also known as custodial care)
- Cosmetic surgery
- Most dental care, including dentures
- Hearing aids and related exams
- Eye examinations and prescription glasses
Why Medicare Advantage Can Be a Good Choice
- Many Medicare Advantage plans offer prescription drug coverage. Original Medicare does not include prescription drug coverage unless you purchase Part D. In 2016, the average monthly premium for a Part D plan was $34.10. The 2017 base premium increased by 4 percent to $35.63 according to the Kaiser Family Foundation.
- Medicare Advantage offers a cap on out-of-pocket expenses. Original Medicare does not offer a cap on out-of-pocket expenses. You keep paying a portion of the services, regardless of how many times you use them. Once the maximum amounts of out-of-pocket expenses have been reached, the Medicare Advantage plan will then cover all qualifying expenses.
- It is more cost-effective than adding Medigap coverage to original Medicare.
- Medicare Advantage plans often cover vision, dental, nursing home care and assisted living facilities. These are not usually covered under original Medicare.
How do I join a Medicare Advantage Plan?
There are a variety of Medicare Advantage plans, and you’ll want to find a plan that works best for your budget and health care needs. Here are the current enrollment options:
- Go to HealthNetwork.com and shop for a Medicare Advantage plan online and either call the phone number to speak to a licensed Medicare sales agent or apply online for the plan that you’ve chosen.
- Use Medicare’s Plan Finder, and visit the plan’s website to see if you can enroll online.
- Complete a paper application and submit it to the plan.
- Call the plan you would like to join and request enrollment procedures.
- Call (800) MEDICARE (633-4227). You can also visit your local Social Security Administration office for more information.