Medicare Advantage, a managed care variant of the Medicare health insurance program for retirees, now claims about one senior in three and many experts peg it for fast growth. The Congressional Budget Office has said enrollment will top 40% of Medicare eligible seniors by 2017. Now some say it very possibly will eclipse enrollment in traditional Medicare within a decade or so. But lately loud, concerned voices have been raised that just maybe Medicare Advantage is a bad deal for those who need it most, the sickest among the elderly.
Here’s the difference between the plans: traditional Medicare is essentially wide open. A senior can use any doctor, any hospital that accepts Medicare. Medicare Advantage, by contrast, is managed care where an enrollee signs on to use a specified network that has been assembled by an insurer. Generally referrals to specialists are required. There usually is limited out of network coverage, except in an emergency.
Why sign on for that? Medicare Advantage saves a senior money. And Medicare Advantage plans will generally offer more coverage than Medicare, perhaps covering hearing aids or vision.
Stitch together a comprehensive traditional Medicare program and that means Medicare Part A (free for all who qualify) and paying for Medicare Part B (lab tests and physicians), Part D (drug coverage) and so-called Medigap coverage (which is intended to pick up what slips through the A, B, D coverage). Total cost: probably $250 to $300 per month, depending upon exact plans and location. (Some coverage also is means tested where higher income seniors pay more.)
Medicare Advantage plans, by contrast, generally cost zero to around $100 per month. And include pretty much all that's involved in an A plus B plus D plus Medigap custom plan.
Why not take the savings and go with Medicare Advantage? Obviously many seniors are doing exactly that. But, said Adria Gross, co-author of Multi-Payer Medicine Nightmare Made in the USA (Outskirts Press, 2015) and a health care consultant, that may be foolish especially for those who most need treatment. “I recently worked with a client who was in and out of five hospitals and skilled nursing facilities within a year," Gross said. "My client was on a Medicare Advantage Plan. With all of her co-pays for each time entering the hospital, her out-of-pocket expenses were much greater than if she had been on traditional Medicare.”
“I've also heard from many seniors the aggravation in obtaining referrals from their primary physician for medical specialist services,” Gross added. "Many of my clients have switched to traditional Medicare.”
A recent New York Times column by health economist Austin Frakt reported on various recent studies that suggest sicker patients are not satisfied with Advantage plans.
A Government Accountability Office study also documented its concerns with network inadequacies with some Advantage plans.
Does this mean Advantage plans should be boycotted? Not so fast.
Ash Shehata, advisory leader for health plans at consulting firm KPMG, related research that found 77% of Medicare Advantage enrollees with chronic conditions expressed satisfaction with their coverage. He added: “As long as you can work within a network model, you tend to be satisfied with Advantage.”
A trouble spot, said Shehata, is “when people require more specialized treatments, that is when you start to see concerns.”
Joe Welfeld, a former United Healthcare HMO CEO who is now a consultant, agreed. “For most people the biggest issue [with Advantage] is the limited network,” he said.
"Most networks will not have major specialty hospitals," he added. "They usually don’t have the major teaching hospitals.”
Network issues, said multiple sources, tend to be most severe with Advantage plans in small markets. In big metropolitan areas, the large insurers have been beefing up their networks - mainly to do battle with each other. But there may not be a lot of medical talent available in small markets.
Critical advice, thus, is always closely check an Advantage plan’s network before signing up and check it again annually.
“Medicare Advantage is a good plan," Welfeld said. "Is it the best? Probably not. But it may be the cheapest.”
Here is the bright spot in this. Medicare enrollees annually, around year-end, have what is called an “open enrollment period.” What that means is a person can test Advantage and, after a year, switch out of it and into traditional Medicare. No penalties. So if Advantage isn’t working, dump it -- plain and simple. If it is working, save the money and smile about that.
This article is commentary by an independent contributor. At the time of publication, the author held TK positions in the stocks mentioned.