What is
Medicare Advantage, and how can payers successfully design these plans to
maximize value for beneficiaries?
As the US population
continues to age, older individuals are seeking out comprehensive, affordable
care options that meet their specific health needs. Medicare Advantage is one
of the most popular ways for consumers to round out their healthcare coverage
as they age.
Traditional Medicare
has consistently played a critical role in providing health coverage for those
65 and older, helping them pay for a wide range of services, including
hospitalizations, physician visits, preventive services, and hospice care.
While original
Medicare has plenty to offer, a market for high-performing, quality private
health plans has emerged, giving insurers an incentive to provide optimal,
reasonably priced coverage in the form of Medicare Advantage (MA) plans.
Medicare Advantage
plan competition is heating up in 2019, with more than
400 options set to hit the market in the coming months.
The Kaiser Family
Foundation (KFF) states that as of 2018, one in three
Medicare beneficiaries is enrolled in a Medicare Advantage plan.
But what is Medicare
Advantage, and how does it work? What do payers need to know in order to
succeed in this increasingly competitive market, and how can they ensure that
they offer beneficiaries the best possible coverage?
WHAT
IS MEDICARE ADVANTAGE?
According to CMS, Medicare Advantage
plans are an all-in-one alternative to original Medicare. MA plans are
offered by Medicare-approved private companies.
Sometimes called Part
C plans, these bundled plans include Medicare Part A (hospital services),
Medicare Part B (medical insurance), and usually Medicare prescription drug
coverage (Part D).
Beneficiaries can
choose from several types of Medicare Advantage plans, with Health Maintenance
Organizations (HMOs) and local Preferred Provider Organizations (PPOs) accounting for the majority of total
Medicare Advantage enrollment.
Members also have
their choice of private fee-for-service plans, in which the plan determines how
much beneficiaries will pay for care; as well as special needs plans, which
tailor benefits, provider choices, and drug formularies to specific
populations.
Each of these plans
is required to have a certain number of providers for 26 medical specialties,
along with hospitals and other providers within a particular distance of
beneficiaries.
The Medicare Advantage
market has grown significantly over the last few years. In October 2018,
KFF reported that 34 percent of Medicare
beneficiaries, or 20.4 million people, were enrolled in Medicare Advantage
plans in 2018 – a major increase from 2017.
“Between 2017 and
2018, total Medicare Advantage enrollment grew by about 1.5 million
beneficiaries, or 8 percent – a nearly identical rate of growth compared to the
prior year,” KFF said.
“The Congressional
Budget Office projects that Medicare Advantage enrollment will continue to grow
over the next decade, with plans including about 42 percent of beneficiaries by
2028.”
KFF added that there are more Medicare
Advantage plans available in 2019 than in any other year since 2009.
“Nationwide, 2,734
Medicare Advantage plans will be available for individual enrollment in 2019 –
an increase of 417 plans since 2018. The average beneficiary will be able to
choose among 24 plans in 2019, up from 21 in 2018,” the organization said.
Kaiser Permanente,
Blue Cross Blue Shield (BCBS) of Minnesota, and Anthem Blue Cross were among the top rated and highest
performing Medicare Advantage health plans in 2018.
Cigna, Humana, Aetna,
and UnitedHealthcare have also recently receivedquality CMS ratings.
Member enrollment
also tends to be concentrated among these firms: KFF states that in 2018, UnitedHealthcare
and Humana together accounted for 43 percent of all Medicare Advantage
enrollees, while BCBS affiliates accounted for another 15 percent.
Aetna, Kaiser
Permanente, Wellcare, and Cigna made up 21 percent of member enrollment in that
year.
WHO
IS ELIGIBLE FOR MEDICARE ADVANTAGE?
In general,
individuals 65 and older can join a Medicare Advantage plan if
they meet three criteria:
- They live in the
service area of the plan they want to join
- They have
Medicare Parts A and B
- They don’t have
end-stage renal disease
The open enrollment
period for Medicare Advantage and Medicare prescription drug coverage extends from October 15 through
December 7 each year.
During this time,
beneficiaries can decide whether they want to change from original Medicare to
a Medicare Advantage plan, or they can switch from one Medicare Advantage plan
to another.
During a separate
enrollment period, from January 1 to March 31, beneficiaries can also switch
Medicare Advantage plans, or disenroll from Medicare Advantage and return to
original Medicare. However, beneficiaries cannot switch from original Medicare
to Medicare Advantage during this period.
WHAT
DO MEDICARE ADVANTAGE PLANS COVER?
Medicare Advantage
plans must cover all the services that original Medicare covers, CMS states. Original Medicare will also cover
the cost of hospice care and some costs for clinical research studies for
Medicare Advantage beneficiaries. Medicare Advantage members are always covered
for emergency and urgently needed care.
However, each
Medicare Advantage plan can charge different out-of-pocket costs, and can have
different rules for how beneficiaries receive services. These rules can include
whether beneficiaries need a referral to see a specialist, or whether members
have to see in-network doctors, facilities, or suppliers for non-emergency
care.
While Medicare
Advantage plans can choose not to cover the costs of certain unapproved or
elective services, beneficiaries can appeal the decision. Beneficiaries or
their providers can also request to see if an item or service will be covered
by a plan in advance.
CMS also notes that
most Medicare Advantage plans may offer extra coverage, such as dental, vision,
hearing, and health and wellness programs.
Members will usually pay a monthly premium for
Medicare Advantage and a monthly Part B premium.
Premiums under
Medicare Advantage are undergoing a steady decline, CMS recently reported, with the average 2019 Medicare
Advantage premium decreasing from $29.81 to $28.00. As of 2019, the average
Part B premium is $135.50, or higher depending on the member's income.
Out-of-pocket costs
in a Medicare Advantage plan depend on whether plans charge a
monthly premium or whether plans pay any of the monthly Part B premium.
Out-of-pocket costs
will also depend on whether members need extra benefits and whether the plan
has a yearly deductible or any additional deductibles. Plans have a yearly
limit on out-of-pocket costs for beneficiaries, so once members reach a certain
limit, they pay nothing for additional covered services.
CMS notes that
individual Medicare Advantage plans, rather than Medicare, determine how much
beneficiaries pay for covered services. The amount members pay for premiums,
deductibles, and services may change only once a year, on January 1.
HOW
DOES MEDICARE ADVANTAGE RELATE AND COMPARE TO ORIGINAL MEDICARE?
Beneficiaries who
choose to join a Medicare Advantage plan still have Medicare, CMS notes, and Medicare pays a fixed amount
each month to the companies offering Medicare Advantage plans. Private
companies offering Medicare Advantage must follow rules set by Medicare.
When deciding between
original Medicare and Medicare Advantage, beneficiaries should carefully review
and consider the details of both plans. Depending on an individual’s health,
budget, and acceptance of financial risk, Medicare Advantage could prove more
or less beneficial than original Medicare.
For example, Medicare
Advantage plans tend to have a more limited network of providers than
traditional Medicare plans. A 2017 study from KFF showedthat 35 percent of Medicare
Advantage beneficiaries were in plans with narrow physician networks. These
plans offer enrollees access to less than 30 percent of physicians in a county.
However, for those
who take prescription drugs, Medicare Advantage may be the better option.
Original Medicare doesn’t cover the cost of
prescription drugs unless members also enroll in Medicare Part D.
In contrast, drug
costs are often covered under Medicare Advantage plans. KFF previously reported that 88 percent
of Medicare Advantage plans offered prescription drug coverage in 2017.
Medicare Advantage
plans also provide out-of-pocket spending caps, and some offer dental and
vision coverage, while traditional Medicare plans do not.
HOW
CAN PAYERS ADD MORE VALUE TO MEDICARE ADVANTAGE PLANS?
While the Medicare
Advantage market has grown considerably in recent years, research has suggested
that these plans can leave consumers feeling less than pleased.
In 2018, JD
Power found that Medicare Advantage
consumer satisfaction scores dropped from 799 in 2017 to 794 in 2018. The
survey revealed that plans were failing to communicate effectively with members
and to ease financial burdens for Medicare Advantage enrollees.
“Efforts to help beneficiaries
better manage and reduce out-of-pocket spending associated with their care and
coordinating care between providers are some of the most powerful drivers of
satisfaction, yet few plans fully deliver on that capability,” Valerie Monet,
Senior Director of the Insurance Practice at JD Power, said at the time.
In order to engage
consumers and stand out in an increasingly competitive environment, payers may
need to implement new strategies and approaches in Medicare Advantage plans.
Increasing personalized
communication
Tailoring
communication efforts to individual beneficiaries could increase member
engagement. A recent HealthMine survey found that 60 percent of Medicare
Advantage enrollees feel that plans aren’t doing enough to inspire personal
health improvements.
With many
beneficiaries living with one or more chronic
conditions, payers should pay attention to modifying communication and
engagement techniques to fit each individual’s specific lifestyle and health
needs.
To achieve this,
payers can use digital channels, such as email and text
messaging, to connect with patients and provide them with resources that could
improve their health.
Payers can also
leverage these technologies to help beneficiaries choose an appropriate
Medicare Advantage plan. Under a rule passed by CMS in 2018, payers
are able to promote new, digitized member engagement strategies.
“CMS noted that more
sophisticated approaches to consumer engagement and decision making should help
beneficiaries, caregivers, and family members make informed plan choices,” the
agency said.
Using data to enhance
social determinants benefits for members
The social
determinants of health play a critical role in overall health and
wellness. Particularly in older and vulnerable populations, the conditions in
which people live, work, and socialize can have significant effects on physical
wellbeing.
To improve Medicare
Advantage benefits, payers can use existing health plan information to target
individual and community factors that may contribute to poor health. Major
payers have launched programs to implement community-level changes.
Humana’s Bold Goal initiative, for example, seeks
to improve the overall physical and mental health of its Medicare Advantage
members by targeting factors such as food insecurity, housing instability,
social isolation, and limited English proficiency.
“As the US population
ages, we need to support their needs as well as the nurses, physicians and
caregivers who are providing direct services and care,” said Bruce D.
Broussard, Humana’s President and CEO.
“Our Bold Goal has
helped us understand the needs of our members and communities better.”
Other payers,
including Blue Cross Blue Shield and UnitedHealthcare, have also initiated
efforts to reduce homelessness, improve transportation options, and expand
access to community resources.
Customizing pricing
for Medicare Advantage plans
Affordability is a
major concern for all healthcare consumers, and may be particularly challenging
for older populations. A recent poll from the University of Michigan Institute
for Healthcare Policy and Innovation found that 45 percent of pre-Medicare
adults are not confident that they will be able to afford healthcare coverage
in retirement.
To ease financial strain for those
enrolled in Medicare Advantage, commercial payers can capitalize on valuable
cost-sharing benefits for enrollees. CMS’s 2018 rule enabled customization of
cost-sharing and member deductibles for Medicare Advantage members, which can
help reduce costs for beneficiaries.
Harvard Pilgrim’s
Stride Medicare Advantage Plan offers prescription
drug coverage with $0 co-pays, as well as reduced co-pays for provider visits.
Humana also offers Medicare Advantage plans with
$0 premiums and no annual deductible. Additionally, Anthem BCBS of Kentucky
recently expanded its $0 premium Medicare
Advantage plans to 29 counties.
Medicare Advantage
has grown rapidly and will continue to expand in the future. The market offers
lucrative opportunities for payers, but industry players will need to confront
challenges in consumer satisfaction and competition.
To stand out in the
Medicare Advantage landscape, payers should examine their capabilities, as well
as the specific needs of patient populations, to offer the best possible plans
for beneficiaries.
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