With the passage of the Balanced Budget Act of 1997, Medicare beneficiaries were given the option to receive their Medicare benefits through private health insurance plans, instead of through the original Medicare plan (Parts A and B). These programs were known as Medicare+Choice or Part C plans.
Pursuant to the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, the compensation and business practices changed for insurers that offer these plans, and "Medicare+Choice" plans became known as Medicare Advantage (MA) plans.
Medicare has a standard benefit package that covers medically necessary care that beneficiaries can receive from any hospital, doctor (except in Alaska), health care provider, durable medical equipment provider, etc...so long as the provider accepts Medicare assignment. For people who choose to enroll in a Medicare private health plan, Medicare pays the private health plan a set amount every month for each member. Members may have to pay a monthly premium in addition to the Medicare Part B premium, but many companies offering Medicare Advantage plans make them available for a $0 monthly premium in addition to the Medicare Part B premium, which the member pays directly to Medicare. Medicare Advantage subscribers generally pay a fixed amount (a copayment of $20, for example) every time they see a doctor as opposed to meeting a deductible and paying a coinsurance (typically 20%) under Original Medicare. The copayment can be higher to see a specialist with a Medicare Advantage plan. Under Original Medicare the coinsurance remains 20%, but the actual amount out of pocket can be higher since specialists generally charge more for services.
The private plans are required to offer a benefit package that is at least as good as Medicare s and cover everything Medicare covers, but they do not have to cover every benefit in the same way. Plans that pay less than Medicare for some benefits, like skilled nursing facility care, can balance their benefits package by offering lower copayments for doctor visits. Private plans use some of the excess payments they receive from the government for each enrollee to offer supplemental benefits. Many plans use the excess subsidies to offer dental coverage, vision coverage, gym memberships and other services not covered by Medicare. As with traditional Medicare, private plan members can incur high out-of-pocket costs, however Medicare Advantage plans typically have an out of pocket maximum ($5,000 for example), which can protect individuals against catastrophic medical bills. Once the out of pocket maximum is reached for an individual, the plan will pay 100% of Medicare approved services for the remainder of the calendar year, with no lifetime maximum. Medicare Advantage plans typically do not contain deductibles, thereby giving members first dollar coverage. Original Medicare has a potentially recurring (more than once per calendar year) deductible for Part A and an annual deductible for Part B.
In 2006 enrollees in Medicare Advantage Private Fee-for-Service plans were offered a net extra benefit value (the value of the additional benefits minus any additional premium) of $55.92 a month more than the traditional Medicare benefit package; enrollees in other Medicare Advantage plans were offered a net extra benefit value of $71.22 a month more.
Medicare Advantage Plans that also include Part D prescription drug benefits are known as a Medicare Advantage Prescription Drug plan or a MAPD.
Enrollment in Medicare Advantage plans grew from 5.4 million in 2005 to 8.2 million in 2007. Enrollment grew by an additional 800,000 during the first four months of 2008. This represents 19% of Medicare beneficiaries. A third of beneficiaries with Part D coverage are enrolled in a Medicare Advantage plan. Medicare Advantage enrollment is higher in urban areas; the enrollment rate in urban counties is twice that in rural counties (22% vs. 10%). Almost all Medicare beneficiaries have access to at least two Medicare Advantage plans; most have access to three or more. The number of organizations offering Fee-for-Service plans has increased dramatically, from 11 in 2006 to almost 50 in 2008. Eight out of ten beneficiaries (82%) now have access to six or more Private Fee-for-Service plans.
According to research by the Kaiser Family Foundation, a record 11.1 million people (approximately 25% of all Medicare beneficiaries) were enrolled in Medicare Advantage plans as of March 2010, up from 10.5 million in March 2009. In their report, Kaiser noted that while most Medicare beneficiaries have dozens of private Medicare Advantage plans available in their community, enrollment is highly concentrated among a small number of firms in nearly all states.
Although the Patient Protection and Affordable Care Act of 2010 does not eliminate Medicare Advantage, it does do away with the subsidies which the federal government first used to establish the Medicare Advantage program and which many Medicare Advantage health insurance plans use to offer supplemental benefits. These subsidies (which added an additional $14 billion to the Medicare program last year alone) will gradually be reduced until they are eliminated altogether. In 2011, these Medicare Advantage subsidy payments will be frozen at 2010 levels. After that, Medicare Advantage subsidy payments will be reduced an average of 12% per year until they are brought in line with traditional Medicare payments.
What is being measured?
For plans covering health services, the overall score for quality of those services covers 36 different topics in 5 categories:
- Staying healthy: screenings, tests, and vaccines: Includes how often members got various screening tests, vaccines, and other check-ups that help them stay healthy.
- Managing chronic (long-term) conditions: Includes how often members with different conditions got certain tests and treatments that help them manage their condition.
- Ratings of health plan responsiveness and care: Includes ratings of member satisfaction with the plan.
- Health plan member complaints and appeal: Includes how often members filed a complaint against the plan.
- Health plan telephone customer service: Includes how well the plan handles calls from members.
For plans covering drug services, the overall score for quality of those services covers 17 different topics in 4 categories:
- Drug plan customer service: Includes how well the drug plan handles calls and makes decisions about member appeals.
- Drug plan member complaints and Medicare audit findings: Includes how often members filed a complaint about the drug plan and findings from Medicare s audit of the plan.
- Member experience with drug plan: Includes member satisfaction information.
- Drug pricing and patient safety: Includes how well the drug plan prices prescriptions and provides updated information on the Medicare website. Includes information on how often members with certain medical conditions get prescription drugs that are considered safer and clinically recommended for their condition.
For plans covering both health & drug services, the overall score for quality of those services covers all of the 53 topics listed above.
Where does the information for the Overall Plan Rating come from?
For quality of health services, the information comes from sources that include:
- Member surveys done by Medicare
- Information from clinicians
- Information submitted by the plans
- Results from Medicare s regular monitoring activities
For quality of drug services, the information comes from sources that include:
- Results from Medicare s regular monitoring activities
- Reviews of billing and other information that plans submit to Medicare
- Member surveys done by Medicare
Governmental links - current
Governmental links - historical
Congressional Research Service (CRS) Reports related to Medicare from the University of Texas Libraries
Center for Medicare Advocacy — National education & advocacy organization.
Medicare Rights Center — Medicare Rights Center is an education and advocacy organization.
Medicare.org — Medicare information site including descriptions of Part A through D
Medicare & Medicaid Resources — Medicare information site
Kaiser Family Foundation — Wide range of free information, including a drug benefit calculator, about the Medicare program and other U.S. health issues.
State Health Facts — Data on health care spending and utilization, including Medicare; provided by the Kaiser Family Foundation.
Medicare - Alliance for Health Reform The nonpartisan, nonprofit Alliance for Health Reform offers information about health reform, in a number of formats, to elected officials and their staffs, journalists, policy analysts and advocates.
HealthDecisions.org — Medicare information from America s Health Insurance Plans (a national association of American health insurers).
- Social Security and Disability News Resource Center
Issue Guide on Medicare — Policy alternatives and public opinion analysis on Medicare from Public Agenda Online
- How Stuff Works - Medicare
- The A-Z Guide to Medicare Plans, Covering Parts A-D and Plans F,M, and N