Meredith Freed,
Anthony Damico, and Tricia Neuman Follow @tricia_neuman on Twitter
Published: Apr 22, 2020
Published: Apr 22, 2020
Medicare Advantage enrollment has grown
rapidly over the past decade, and Medicare Advantage plans have taken on a larger role in the Medicare
program. This data analysis provides current information and trends about Medicare Advantage enrollment, premiums, and
out-of-pocket limits. It also includes analyses of Medicare Advantage plans’
extra benefits and prior authorization requirements. The analysis also
highlights changes pertaining to Medicare Advantage coverage that have occurred
in 2020 in response to the COVID-19 crisis.
1. Enrollment in
Medicare Advantage has doubled over the past decade
Figure 1: Total Medicare Advantage Enrollment, 1999-2020
In 2020, more than one-third (36%) of all
Medicare beneficiaries – 24.1 million people out of 67.7 million Medicare
beneficiaries overall – are enrolled in Medicare Advantage plans; this rate has
steadily increased over time since the early 2000s. Between 2019 and 2020,
total Medicare Advantage enrollment grew by about 2.1 million beneficiaries, or
9 percent – nearly the same growth rate as the prior year. The Congressional
Budget Office (CBO) projects that the share of all Medicare beneficiaries
enrolled in Medicare Advantage plans will rise to about 51 percent by 2030.
Nearly one in five Medicare Advantage
enrollees (19%) are in group plans offered by employers and unions for their
retirees in 2020, roughly the same share since 2014. Under these arrangements,
employers or unions contract with an insurer and Medicare pays the insurer a
fixed amount per enrollee to provide benefits covered by Medicare. The employer
or union (and sometimes the retiree) may also pay a premium for additional
benefits or lower cost-sharing. Group enrollees comprise a disproportionately
large share of Medicare Advantage enrollees in nine states: Alaska (100%),
Michigan (49%), West Virginia (44%), New Jersey (40%), Wyoming (36%), Illinois
(35%), Maryland (35%), Kentucky (34%), and Delaware (31%).
2. The share of
Medicare beneficiaries in Medicare Advantage plans across the United States
ranges from 1% to over 40%
The share of Medicare beneficiaries in
Medicare Advantage plans (including Medicare cost plans), varies across the
country. More than 40 percent of Medicare beneficiaries are enrolled in
Medicare Advantage plans in nine states (HI, FL, MN, OR, WI, MI, AL, PA, CT)
and Puerto Rico. Medicare Advantage enrollment is relatively low (20 percent or
lower) in 12 states and the District of Columbia, including two mostly rural
states where it is virtually non-existent (AK and WY).
Historically, the majority of Medicare private
health plan enrollment in Minnesota has been in cost plans, rather than
risk-based Medicare Advantage plans, but as of 2019, most cost plans in
Minnesota are no longer offered and have been replaced with risk-based HMOs and
PPOs.
Changes for 2020 due to
COVID-19: The COVID-19
stimulus package, the Coronavirus Aid, Relief, and Economic Security (CARES) Act,
includes $100 billion in new funds for hospitals and other health care
entities. The Centers for Medicare and Medicaid Services (CMS) has recently made
$30 billion of these funds available to health care providers
based on their share of total Medicare fee-for-service (FFS) reimbursements in
2019, resulting in higher payments to hospitals in some states than in others.
Hospitals in states with higher shares of Medicare Advantage enrollees may have
lower FFS reimbursement overall. As a result, some hospitals and other health
care entities may be reimbursed less that they would if the allocation of funds
took into account payments received on behalf of Medicare Advantage enrollees.
3. The share of
Medicare beneficiaries in Medicare Advantage plans varies across counties from
less than 1% to more than 60%
Within states, Medicare Advantage penetration
varies widely across counties. For example, in Florida, 67 percent of all
beneficiaries living in Miami-Dade County are enrolled in Medicare Advantage
plans compared to only 11 percent of beneficiaries living in Monroe County (Key
West).
In 180 counties, accounting for 10 percent of
the Medicare population, more than half of all Medicare beneficiaries are
enrolled in Medicare Advantage plans or cost plans. Many of these counties are
centered around large, urban areas, such as Monroe County, NY (66%), which
includes Rochester, and Allegheny County, PA (60%), which includes Pittsburgh.
In contrast, in 553 counties, accounting for 4
percent of Medicare beneficiaries, no more than 10 percent of beneficiaries are
enrolled in Medicare private plans; many of these low penetration counties are
in rural parts of the country. Some urban areas, such as Baltimore City (18%)
and Cook County, IL (Chicago, 26%) have low Medicare Advantage enrollment,
compared to the national average (36%).
4. Most Medicare
Advantage enrollees are in plans operated by UnitedHealthcare, Humana, or
BlueCross BlueShield (BCBS) affiliates in 2020
Figure 4: Medicare Advantage Enrollment by Firm or Affiliate,
2020
Medicare Advantage enrollment is highly
concentrated among a small number of firms. UnitedHealthcare and Humana
together account for 44 percent of all Medicare Advantage enrollees nationwide,
and the BCBS affiliates (including Anthem BCBS plans) account for another 15
percent of enrollment in 2020. Another four firms (CVS Health, Kaiser
Permanente, Centene, and Cigna) account for another 23 percent of enrollment in
2020. For the fourth year in a row, enrollment in UnitedHealthcare’s plans grew
more than any other firm, increasing by more than 500,000 beneficiaries between
March 2019 and March 2020. This is also the first year that Humana’s increase
in plan year enrollment was close to UnitedHealthcare’s, with an increase of
about 494,000 beneficiaries between March 2019 and March 2020. CVS Health
purchased Aetna in 2018 and had the third largest growth in Medicare Advantage
enrollment in 2020, increasing by about 396,000 beneficiaries between March
2019 and March 2020.
Changes for 2020 due to
COVID-19: Medicare Advantage
plans have flexibility to waive certain requirements with regard to coverage
and cost sharing in cases of disaster or emergency, such as the COVID-19
outbreak. In response to the COVID-19 emergency, most Medicare Advantage insurers have announced that they are voluntarily
waiving cost-sharing requirements for COVID-19 treatment.
5. Half of all
Medicare Advantage enrollees would incur higher costs than beneficiaries in
traditional Medicare for a 5-day hospital stay
Figure 5: Medicare Advantage Enrollee Cost Sharing, by Length of
Inpatient Hospital Stay, 2020
When Medicare Advantage enrollees require an
inpatient hospital stay, many Medicare Advantage plans charge a daily
copayment, beginning on day 1. Cost sharing requirements for
Medicare Advantage enrollees also typically vary by length of stay.
In contrast, under traditional Medicare, when beneficiaries require an
inpatient hospital stay, there is a deductible of $1,408 in
2020 (for one spell of illness) with no copayments until day 60
of an inpatient stay.
In 2020, virtually all Medicare Advantage
enrollees would pay less than the Part A hospital deductible for an inpatient
stay of 3 days. But for stays of 5 days, among the half of Medicare Advantage
enrollees required to pay more than the beneficiaries in traditional Medicare,
those enrollees would pay $1,644 on average. Nearly two-thirds (64%) of
Medicare Advantage enrollees are in a plan that requires higher cost sharing
than the Part A hospital deductible in traditional Medicare for a 7-day
inpatient stay, and more than 7 in 10 (72%) are in a plan that requires higher
cost sharing for a 10-day inpatient stay.
Changes for 2020 due to
COVID-19: Because the majority of Medicare Advantage firms have waived cost sharing for
COVID-19 treatment, Medicare Advantage enrollees would not have to
pay cost sharing if they require hospitalization due to COVID-19, though they
would if they are hospitalized for other reasons. However, beneficiaries in traditional Medicare
without supplemental coverage, would be responsible for any
out-of-pocket costs relating to COVID-19 treatment if they are admitted to the
hospital.
6. Nearly two-thirds
of Medicare Advantage enrollees pay no premium (other than the Part B premium)
in 2020
Figure 6: Distribution of Medicare Advantage Prescription Drug
Plan Enrollees, by Premium, 2020
In 2020, 90% of Medicare Advantage plans offer
prescription drug coverage (MA-PDs), and most Medicare Advantage
enrollees (89%) are in plans that include this prescription drug coverage.
Nearly two-thirds of these beneficiaries (60%) pay no premium for their plan,
other than the Medicare Part B premium ($144.60 in 2020). However, 18 percent
of beneficiaries in MA-PDs (2.8 million enrollees) pay at least $50 per month,
including 6 percent who pay $100 or more per month, in addition to the monthly
Part B premium. The MA-PD premium includes both the cost of Medicare-covered
Part A and Part B benefits and Part D prescription drug coverage. Among MA-PD enrollees
who pay a premium for their plan, the average premium is $63 per month.
Altogether, including those who do not pay a premium, the average MA-PD
enrollee pays $25 per month in 2020.
Changes for 2020 due to
COVID-19: During the duration
of the COVID-19 public health emergency, Medicare Part D plans, including
MA-PDs and stand-alone drug plans, are required to provide up to a
90-day (3 month) supply of covered Part D drugs to enrollees
who request it to make it easier for beneficiaries to shelter in place, without
taking unnecessary trips to the pharmacy to fill a prescription.
7. Premiums paid by
Medicare Advantage enrollees have slowly declined since 2015
Figure 7: Average Monthly Medicare Advantage Prescription Drug
Plan Premiums, Weighted by Plan Enrollment, 2010-2020
Nationwide, average Medicare Advantage
Prescription Drug (MA-PD) premiums declined by $4 per month between 2019 and
2020, much of which was due to the relatively sharp decline in premiums for
local PPOs this past year. Average premiums for HMOs also declined $3 per
month, while premiums for regional PPOs increased $3 per month between 2019 and
2020.
Average MA-PD premiums vary by plan type,
ranging from $20 per month for HMOs to $32 per month for local PPOs and $47 per
month for regional PPOs. Nearly two-thirds (61%) of Medicare Advantage
enrollees are in HMOs, 33% are in local PPOs, and 5% are in regional PPOs in
2020.
8. For Medicare
Advantage enrollees, the average out-of-pocket limit is $4,925 for in-network
services and $8,828 for both in-network and out-of-network services (PPOs)
Figure 8: Average
Medicare Advantage Plan Out-of-Pocket Limits, Weighted by Plan Enrollment, 2020
In 2020, Medicare Advantage enrollees’ average
out-of-pocket limit for in-network services is $4,925 (HMOs and PPOs) and
$8,828 for out-of-network services (PPOs). For HMO enrollees, the average
out-of-pocket (in network) limit is $4,486; these plans do not cover services
received from out-of-network providers. For local and regional PPO enrollees,
the average out-of-pocket limit for both in-network and out-of-network services
are $8,795, and $9,010, respectively. These out-of-pocket limits apply to Part
A and B services only, and do not apply to Part D spending.
HMOs generally only cover services provided by
in-network providers, whereas PPOs also cover services delivered by
out-of-network providers but charge enrollees higher cost-sharing for this
care. The size of Medicare Advantage provider networks for physicians and hospitals vary
greatly both across counties and across plans in the same county.
Average overall out-of-pocket limits for
in-network services has trended down from 2017 – with the largest decrease for
HMOs (down from $4,976 in 2017 to $4,486 in 2020). Out-of-network limits for
PPOs (which provide coverage for out-of-network services) have also decreased
since 2017 (down from $9,073 in 2017 to $8,828 in 2020).
Since 2011, federal regulation has required
Medicare Advantage plans to provide an out-of-pocket limit for services covered
under Parts A and B not to exceed $6,700 (in-network) or $10,000 (in-network
and out-of-network combined). Beginning next year, in 2021, these limits will
increase to $7,550 (in-network) and $11,300 (in-network and
out-of-network) due to changes in eligibility for beneficiaries with End Stage Renal
Disease (ESRD) who will, for the first time, be able to enroll in Medicare
Advantage plans. Beneficiaries with diagnoses of ESRD typically
incur higher costs than the average beneficiary, and CMS is making these
changes to out-of-pocket maximums to better reflect beneficiary spending.
Changes for 2020 due to
COVID-19: In light of the
declaration of a public health emergency in response to the coronavirus
pandemic, certain special requirements with regard to out-of-network services are
in place. During the period of the declared emergency, Medicare
Advantage plans are required to cover services at out-of-network facilities
that participate in Medicare, and charge enrollees who are affected by the
emergency and who receive care at out-of-network facilities no more than they
would face if they had received care at an in-network facility.
9. Most Medicare
Advantage enrollees have access to some benefits not covered by traditional
Medicare in 2020
Figure 9: Share of
Medicare Advantage Enrollees in Plans with Extra Benefits by Benefit Type, 2020
Medicare Advantage plans may provide extra
(“supplemental”) benefits that are not offered in traditional Medicare, and can
use rebate dollars to help cover the cost of extra benefits. Plans can also
charge additional premiums for such benefits. Beginning in 2020, Medicare
Advantage plans can offer additional supplemental benefits that were not
offered in previous years. These supplemental benefits must still be considered
“primarily health related” but CMS has expanded this definition, so more items
and services are available as supplemental benefits.
Most enrollees are in plans that provide
access to eye exams or glasses (79%), telehealth services (77%), dental care (74%), a
fitness benefit (74%), and hearing aids (72%). Since 2010, the share of
enrollees in plans that provide some dental care, fitness benefits, or hearing
aids has increased (from 48%, 52%, and 37% of enrollees, respectively) while
the share with a vision benefit has been relatively steady (77% in 2010).
Changes for 2020 due to
COVID-19: CMS is allowing the expansion of mid-year benefit enhancements, such as
additional or expanded benefits or more generous cost sharing, as
long as they are in connection with the COVID-19 public health emergency. For
example, Medicare Advantage plans may add transportation benefits or meal
delivery services to promote social distancing during the COVID-19 outbreak.
Many are also expanding telehealth services and are waiving or reducing cost sharing for telehealth services.
Changes that have occurred since the start of the plan year, including changes
to telehealth adopted by plans in response to the pandemic, are not reflected
in the data used for this analysis.
10. Nearly all
Medicare Advantage enrollees are in plans that require prior authorization for
some services
Figure 10: Share of
Medicare Advantage Enrollees Required to Receive Prior Authorization, by
Service, 2020
Medicare Advantage plans can require enrollees
to receive prior authorization before a service will be covered, and nearly all
Medicare Advantage enrollees (99%) are in plans that require prior
authorization for some services in 2020. Prior authorization is most often
required for relatively expensive services, such as inpatient hospital stays,
skilled nursing facility stays, and Part B drugs, and is infrequently required
for preventive services. The number of enrollees in plans that require prior
authorization for one or more services increased from 2019 to 2020, from 79% in
2019 to 99% in 2020. In contrast to Medicare Advantage plans, traditional
Medicare does not generally require prior authorization for services, and does
not require step therapy for Part B drugs.
Changes for 2020 due to
COVID-19: In response to the
COVID-19 public health emergency, several Medicare Advantage plans have waived prior authorization
requirements for individuals needing treatment for COVID-19.
11. The majority (78%)
of Medicare Advantage enrollees are in plans that receive high quality ratings
(4 or more stars) and related bonus payments
Figure 11: Share of
Medicare Advantage Enrollees Required to Receive Prior Authorization, by
Service, 2020
In 2020, more than three-quarters (78%) of
Medicare Advantage enrollees are in plans with quality ratings of 4 or more
stars, an increase from 2019 (72%). An additional 4 percent of enrollees are in
plans that were not rated because they were part of contracts that had too few
enrollees or were too new to receive ratings. Plans with 4 or more stars and
plans without ratings are eligible to receive bonus payments for each enrollee
the following plan year. The share of enrollees in plans with 3 stars (average
ratings) declined by half from 6 percent in 2019 to 3 percent in 2020.
For many years, CMS has posted quality ratings
of Medicare Advantage plans to provide beneficiaries with additional
information about plans offered in their area. All plans are rated on a 1 to
5-star scale, with 1 star representing poor performance, 3 stars representing
average performance, and 5 stars representing excellent performance. CMS
assigns quality ratings at the contract level, rather than for each individual
plan, meaning that each plan covered under the same contract receives the same
quality rating; most contracts cover multiple plans.
Changes for 2020 due to
COVID-19: Due to the COVID-19
emergency, CMS has issued an Interim Final Rule that will modify the calculation of
the 2021 and 2022 Medicare Advantage Star Ratings to address the expected
disruption to data collection and measure scores, and avoid creating incentives
that, according to CMS, might lead plans to place cost considerations above
patient safety.
12. More than 3
million Medicare beneficiaries are enrolled in Special Needs Plans in 2020
Figure 12: Number of
Beneficiaries in Special Needs Plans, 2006-2020
More than three million Medicare beneficiaries
are enrolled in Special Needs Plans (SNPs). SNPs restrict enrollment to
specific types of beneficiaries with significant or relatively specialized care
needs. The majority of SNP enrollees (86%) are in plans for beneficiaries
dually eligible for Medicare and Medicaid (D-SNPs), Another 11 percent of
enrollees are in plans for people with severe chronic or disabling conditions
(C-SNPs) and 3 percent are in plans for beneficiaries requiring a nursing home
or institutional level of care (I-SNPs).
Enrollment in SNPs increased from 2.9 million
beneficiaries in 2019 to 3.3 million beneficiaries in 2020 (15% increase),
accounting for about 14 percent of total Medicare Advantage enrollment in 2020,
with some variation across states. In nine states, the District of Columbia,
and Puerto Rico, enrollment in SNPs comprises at least one-fifth of Medicare
Advantage enrollment (55% in DC, 48% in PR, 23% in SC, 23% in NY, 21% in AR,
21% in GA, 21% in MS, 20% in AZ, 20% in FL, 20% in LA, and 20% in TN). Most C-SNP
enrollees (94%) are in plans for people with diabetes or cardiovascular
disorders in 2020. Enrollment in I-SNPs has been increasing but is still fewer
than 100,000 beneficiaries in 2020.
Changes for 2020 due to
COVID-19: In response to the
public health emergency, CMS will use discretion when enforcing certain oversight and monitoring
activities relating to SNPs, including if Medicare Advantage plans
do not fully comply with their approved SNP model of care (MOC) or if plans
experience delays in recertifying SNP eligibility.
Meredith Freed and Tricia Neuman are with KFF.
Anthony Damico is an independent consultant.
Anthony Damico is an independent consultant.
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Data and Methods
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This analysis
uses data from the Centers for Medicare & Medicaid Services (CMS)
Medicare Advantage Enrollment, Benefit and Landscape files for the respective
year, with enrollment data from March of each year. Cost plans are grouped with
Medicare Advantage plans, and this analysis uses the term Medicare Advantage
to refer to both types of plans, even though cost plans are paid differently
and subject to different rules. Enrollment counts in publications by firms
operating in the Medicare Advantage market, such as company financial
statements, might differ from KFF estimates due to inclusion or exclusion of
certain plan types, such as SNPs or employer plans.
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