The sales pitches appear in your mailbox and inbox, in robocalls and text messages. Advertisements target you on radio, television and social media. These campaigns, touting Medicare Advantage plans, promise low premiums and a variety of additional benefits.
And they work. The proportion of eligible Medicare beneficiaries enrolled in Medicare Advantage plans funded by federal dollars but offered through private insurance companies has reached 48 percent. Next year, a majority of beneficiaries will likely be enrolled in the Advantage plan.
The annual registration period has started again. Beginning last month and through December 7, beneficiaries can switch from traditional Medicare to Medicare Advantage or vice versa, or switch between Advantage plans. So now is a good time to look at the differences between these two approaches.
“It’s a very consistent decision, and the most important thing is to be informed,” said Jeannie Fuglesten Biniek, senior policy analyst at the Kaiser Family Foundation and co-author of a recent literature review comparing Advantage and traditional Medicare.
An important finding, said Dr. Biniek: “Both Medicare Advantage and traditional Medicare beneficiaries reported being satisfied with their care — a large majority in both groups.”
Examining 62 published studies, the researchers found that Advantage plans performed better on a few measures. For example, beneficiaries were more likely to use preventive services such as the annual wellness visit and flu and pneumonia vaccinations. Beneficiaries were also more likely to say they had a doctor, a “usual source of concern.”
In contrast, traditional Medicare beneficiaries experienced fewer affordability problems if they had supplemental Medigap policies, but worse affordability problems if they didn’t. And they were more likely to use high-quality hospitals and nursing homes.
However, none of these differences have led to widespread shopping or shifts between the programs in either direction. (Dozens of lawsuits accusing some Medicare Advantage insurers of fraudulently increasing their profits apparently haven’t made much of a difference to consumers, either.)
A key reason for Advantage plans is that consumers can compare them to find the best individual coverage. But in 2020, only three in 10 Medicare beneficiaries compared their current plans with others, a study by the Kaiser Family Foundation reported.
Even fewer beneficiaries changed plans, which may reflect consumer satisfaction or the daunting task of evaluating the pluses and minuses. This year, the average beneficiary can choose from 38 Advantage plans, the Commonwealth Fund reports.
Still, Medicare Advantage and traditional Medicare, also known as original Medicare or fee-for-service Medicare, work very differently, and the health and financial consequences can be dramatic.
Benefit plans offer simplicity. “It’s one-stop shopping,” said Dr. Binic. “You get your drug plan included and you don’t need a separate supplemental policy,” the kind traditional Medicare beneficiaries often buy.
Medicare Advantage may seem cheaper because many plans charge low or no monthly premiums. Unlike traditional Medicare, Advantage plans also cover out-of-pocket expenses. Starting next year, beneficiaries will pay no more than $8,300 in in-network fees, excluding drugs — or $12,450 with the kind of plan that also allows participants to use third-party providers at a higher cost.
However, only about a third of Advantage plans allow that choice. “Most plans work like an HMO — you can only go to contracted providers,” says David Lipschutz, associate director of the Center for Medicare Advocacy.
Benefit entrants may also be drawn to benefits that traditional Medicare cannot provide. “Vision, dentistry and hearing are the most popular,” said Mr. Lipschutz, but the plans may also include a gym membership or transportation.
“We are warning people to look at the magnitude of the benefits,” he added. “They may be limited or unavailable to everyone on the plan. Dental care can cover one cleaning and that’s it, or it can be broader.” Most Advantage registrants who take advantage of these benefits still pay most dental, vision, or hearing costs out of pocket.
As for traditional Medicare, “the big pro is that there are no networks,” said Dr. Binic. “You can see any doctor that accepts Medicare, which is just about any doctor,” and use any hospital or clinic.
Traditional Medicare beneficiaries also largely avoid the delays and frustrations of “pre-authorization.” Benefit plans require this pre-approval for many procedures, medications, or facilities.
“Your doctor or the facility says you need more care” — in a hospital or nursing home, for example — “but the plan says, ‘No, five days, or a week, or two weeks, is fine,'” said Mr. said Lipschütz. The patient must either forego care or pay out of pocket.
Beneficiary participants who have been refused care can appeal; if they do, the plans reverse their denials 75 percent of the time, according to a 2018 report from the Department of Health and Human Services’ Office of Inspector General. But only about 1 percent of beneficiaries or caregivers appeal, “meaning there is a lot of necessary care that enrollees lack,” said Mr. Lipschutz.
Another report from the Office of Inspector General this spring determined that 13 percent of services denied by Advantage plans met Medicare coverage rules and would have been approved under traditional Medicare.
While people can switch between Medicare Advantage plans quite easily, switching from traditional Medicare to Advantage comes with an important caveat.
Because traditional Medicare has no cap on out-of-pocket expenses, the 20 percent co-payment can quickly add up for hospitalizations or expensive tests and procedures. Most beneficiaries therefore rely on supplemental insurance, known as Medigap policies, to cover those costs; either they buy a policy or have additional coverage through an employer or Medicaid.
Beneficiaries who leave traditional Medicare for Medicare Advantage plans are giving up that Medigap policy. If they later become dissatisfied and want to return to traditional Medicare, insurers can deny their Medigap applications or charge high prices based on factors such as pre-existing conditions.
“A lot of people think they can try Medicare Advantage for a while, but it’s not a two-way street,” said Mr. Lipschutz. Except in four states that guarantee fixed-price Medigap coverage — New York, Massachusetts, Connecticut and Maine — “it’s a type of insurance that can discriminate against you based on your health,” he said.
David Meyers, a health researcher at Brown University, and his colleagues have been tracking the differences between the original Medicare and Medicare Advantage for years, using data from millions of people.
The team found that Advantage beneficiaries are 10 percent less likely to attend the highest-quality hospitals, 4 to 8 percent less likely to be admitted to the highest-quality nursing homes, and half as likely to receive the highest-rated hospitals. cancer centers for complex cancer surgeries, compared to comparable patients in the same provinces or zip codes.
Overall, patients with high needs — they were frail, limited in their daily life activities, or had chronic conditions — were more likely to switch to traditional Medicare than those without high needs.
Why was that? “If you’re healthier, you may encounter fewer restrictions from networking and prior consent,” hypothesized Dr. Meyers. “If you have more complex needs, you run into them more often.”
Trying to figure out what kind of Medicare, including a Part D drug plan, is in your favor can be difficult even for knowledgeable consumers. Benefit plan networks change regularly; doctors and hospitals that are in the network this year may be out the following year. Drug formulas also change. A new Senate report documented deceptive marketing and advertising practices that added to the confusion and prompted Medicare to promise more police work.
Its best allies, along with the Medicare website and the toll-free 1-800-MEDICARE number, are the federally funded state health insurance programs, whose trained volunteers can help people review Medicare and drug plans.
These state programs “are unbiased and have no pecuniary interest in your decision-making,” Mr Lipschutz said. But their appointments fill up quickly at this time of year. Don’t delay.
