One regulatory difference between traditional Medicare and Medicare Advantage
January 07, 2024
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January 07, 2024
Medicare Advantage health insurance plans are touted as the same as traditional Medicare, but operated by private insurance companies. As such, Medicare Advantage plans are often pitched with extras, such as a regular allowance that can be spent on qualified medical expenses (such as toothpaste or glasses) or a gym membership. However, KFF Health News published an article about seniors discovering some important differences: Medicare Advantage enrollees lack guaranteed eligibility in Medigap plans (in most states) and more limited acceptance by providers.
Medigap plans (also known as Medicare supplemental plans) are private plans that help cover holes (or "gaps") in Medicare coverage in exchange for an additional premium. The article explains "In traditional Medicare, enrollees pay a monthly premium and, after reaching a deductible, in most cases are expected to pay 20% of the cost of each nonhospital service or item they use. And there is no limit on how much an enrollee may have to pay as part of that 20% coinsurance if they end up using a lot of care." For patients who have chronic conditions that require much care, Medigap can save meaningful amounts. Enrollees in traditional Medicare are guaranteed eligibility in Medigap plans, but enrollees in Medicare Advantage plans can have their premiums priced according to patients' medical histories. It seems that even patients who switch back from Medicare Advantage to traditional Medicare are not guaranteed the favorable pricing.
This disparity in the Medigap eligibility and pricing guarantee seems to give traditional Medicare an advantage. It is unclear if the disparity is intentional, and four states have extended the guarantee to Medicare Advantage plans. Since patients frequently do not know upfront whether they would use Medigap insurance, it seems that patients would benefit if they all had the same Medigap guarantee, regardless of whether they are enrolled in traditional Medicare or in Medicare Advantage.
Something else that would make it easier for patients to compare traditional Medicare and Medicare Advantage plans would be published metrics of acceptance by providers. If patients have a difficult time finding providers that accept their insurance plans, that meaningfully changes the quality of the insurance.
Both of these changes seem pertinent, especially as recent years have seen significant growth in enrollment in Medicare Advantage plans.
January 01, 2024
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December 25, 2023
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December 17, 2023
It is generally easy to know the price of a health insurance plan (the premium), but how does one measure the quality of one? There are many dimensions to rate a plan one. For example, if a health insurer is notorious for denying claims, patients might be less likely to enroll with its plans. Another dimension is whether the insurance plan is accepted by a wide range of physicians. A insurance plan might not be popular with physician if it offers reimbursement rates that are too low or if it incurs too much hassle before paying claims. Inversely, health insurance plans can grow their networks by offering higher reimbursement rates, which unfortunately, generally causes the plans to be more expensive. As KFF Health News reports, the current administration is proposing to articulate specific network adequacy standards (for example, quantifying the lower bound on how many physicians of each particular specialty need to be available within patient populations).
When the Affordable Care Act passed, the legislation mandated the coverage of various conditions so that patients could more easily compare plans. Regulation around minimum network adequacy standards will help ensure that health insurance plans will be more useful to patients -- after all, what good is insurance if the patient cannot use it for lack of physician availability? Setting these standards can be difficult, but are likely to involve the number of physicians in an area that are in network relative to the number of patients in that area, with different ratios for different physician specialties. One component of the standards also seems to test how long a patient must travel in order to see a provider. Beyond the complexity of calculating network adequacy, these standards will also likely cause some plans to be more expensive, just as mandating a minimum level of coverage increased the price of health plans.
December 10, 2023
Patients who are 65 years old and older qualify for Medicare health insurance. Seniors can opt for Medicare Advantage plans, which, unlike traditional Medicare plans, are administered by private companies (e.g. health insurance carriers). These Medicare Advantage plans can offer various benefits that traditional Medicare plans do not, attracting a number of patients. KFF notes that enrollment in Medicare Advantage plans (as a percentage of total eligible Medicare patients) has grown from 19% in 2007 to 51% in 2023. However, KFF Health News recently reported that an increasing number of provider groups have been refusing to accept some Medicare Advantage plans, citing low reimbursement rates and increased hassles in getting paid.
Without safeguards in place, healthcare costs can rise quickly, resulting in higher insurance premiums. Offering lower reimbursements can help reduce the growth in premiums, but providers are less happy about receiving less compensation. Similarly, practices such as requiring prior authorizations can also curb healthcare spending, but do so at the expense of imposing administrative burdens on providers. Apparently, some plans have push far enough in these dimensions that some provider groups are outright refusing to accept some Medicare Advantage plans.
Interestingly, the article cited a study that showed that "13% of the denied requests for treatment it reviewed and 18% of denied claims were for care that should have been covered." The article also noted that "Studies show that Medicare Advantage costs taxpayers more per beneficiary than the traditional program." While many patients are happier with Medicare Advantage plans, it is unclear whether the government ends up better by offering that option. Given recent refusals by some provider groups to participate, it is also unclear whether Medicare Advantage plans will continue their growth in popularity.