By Debbie Zimmerman
By emphasizing better-coordinated preventive care, Medicare Advantage (MA) plans pave the way to a more patient-centric future health system that prioritizes and rewards quality and cost-effective care.
Today’s highest-rated Medicare Advantage plans have succeeded by properly aligning financial incentives among key players, leveraging data and analytics to find opportunity for clinical improvement and using new technologies to improve the convenience of care delivery.
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The rapid growth of MA plans has been one of the major healthcare stories over the last decade or so. Between 2004 and 2017, the number of beneficiaries enrolled in MA plans more than tripled to 19 million, growing from 13% to 33% of all Medicare beneficiaries.
Along with this surge in demand from seniors came an expansion in supply, with large, incumbent health insurers, provider organizations and well-funded startups sponsoring MA plans. In 2019, a total of 3,700 plans are available nationwide, a year-over-year increase of 19%, according to the U.S. Centers for Medicare and Medicaid Services (CMS).
What’s behind MA’s popularity
MA plans offer several advantages to seniors, largely stemming from plans’ incentives in how they’re reimbursed by CMS. Unlike traditional fee-for-service (FFS) Medicare, MA plans are reimbursed with a per-member, per-month amount based on that member’s assessed health risks, meaning that MA plans have the opportunity to more efficiently manage medical expenses by keeping members healthy and avoiding expensive inpatient care at hospitals.
For seniors, this has translated to MA becoming an increasingly appealing and affordable option. In 2019, MA premiums are estimated to have reached their lowest level in three years, down 6% year-over-year to $28 per month, according to CMS. Nearly 83% of MA enrollees who remained in their existing plans had the same or lower premiums in 2019, and approximately 46% of enrollees in their existing plan have a zero premium.
In addition, MA plans provide financial certainty for an increasingly cost-conscious generation of seniors. Since 2011, all MA plans have been required to limit beneficiaries’ out-of-pocket spending for services covered under Medicare Parts A and B to no more than $6,700, according to the Kaiser Family Foundation.
Further, comparison shopping among MA plans is made easier for seniors through the program’s Star Ratings, which provide an overall assessment of a plan’s quality and performance. A plan that includes health services and prescription drug coverage, for example, is given a star rating that grades its quality in multiple areas, including screening tests and vaccines, managing chronic conditions, member experience with the health and drug plans, member complaints about changes in health and drug plan performance, health and drug plan customer service, and drug safety and pricing accuracy. Though imperfect, MA star ratings are among the best-quality assessment tools available to U.S. health consumers.