Medicare Advantage

Medicare Advantage Plans

From Wiki….

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 a monthly premium to a private insurance company and receives coverage 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 other coverage (e.g., for prescription drugs) separately.[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.[citation needed] 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.[citation needed] By contrast, most Medicare Advantage plans negotiate payment rates and form networks with healthcare providers, similar to how purely private health insurance plans operate.[citation needed] 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%[citation needed]) will have access to at least one Medicare Advantage plan in 2020; the average beneficiary will have access to 39[citation needed] plans per county. 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).