TV these days is flooded with commercials promoting Medicare Advantage(MA). What is MA and why are they doing this?
First of all, in spite of the name, MA is totally separate and is not a part of or an add-on to traditional Medicare. Medicare eligible citizens must choose one or the other – not both.
A bit of history. For more than 30 years Congress has debated whether the private insurance industry could deliver Medicare benefits more efficiently than the federal government. In 2003 these efforts evolved into what is now known as Medicare Part C or, more commonly, Medicare Advantage (MA).
MA plans, operated by private insurance companies, cover services provided by Parts A and B of traditional fee-forservice (FFS) Medicare and often cover additional services as well. The actual array of benefits covered varies by plan. Many, but not all, offer coverage for such services as vision and dental.
MA plans are paid by the government using a unique structure in which they get a set payment for each person they enroll whether those individuals use medical services or not. That payment is known as the “benchmark.” The government determines the size of the benchmark based on what traditional FFS Medicare would expect to spend providing care for the residents in that zip code area. This is why the ads always ask you to provide your zip code when you are looking for an MA plan. If they decide to offer a plan in that area but decide the benchmark payment will not cover the full cost of the care they may charge the enrollee an additional premium.
So, what is the downside? Broader benefits and decreased out-of-pocket costs would seem to be powerful incentive to switch from FFS to MA. In fact that is what has happened. Many enrollees have been pleased with the switch. There are, however, increasing reasons to be cautious.
Fixed limits on what they will be paid provide an incentive for plans to limit what they spend. In general they have been successful in doing this and, for most plans, MA has been a highly profitable undertaking – a fact which accounts for the multitude of TV ads we see.
To control costs, some plans cover only limited networks of medical providers. This has meant that enrollees had to leave familiar doctors, hospitals, etc. Medical providers have complained that MA plans have been much harder to work with than FFS. Some have complained about delayed and insufficient payment, refusal to authorize hospital admission, frequent requirements for pre-authorization for procedures, etc.
The provider dissatisfaction with MA plans has steadily grown over the years. A year ago the Brookings hospital decided they could no longer accept the payment delays and rejections they received from MA plans and decided to no longer participate with MA. This year both Avera and Sanford have announced that any enrollees with Humana plans who present at their facilities will be treated as “out of network” meaning that out-of-pocket charges to enrollees will be higher — sometimes much higher.
Selecting health care coverage is both difficult and very important. We are now in the “open enrollment” period for Medicare. This is a time when eligible folks can decide if they want traditional FFS Medicare or a MA plan. If they choose the latter they then have to select the plan that best fits their needs. Many people have been well served by MA plans but they need to ask about network requirements, extent of coverage, additional premiums, etc. This is an important decision and one that should receive careful thought and attention.