2014 Medicare Advantage

Medicare Advantage plans typically provide benefits beyond fee-for-service Medicare, sometimes for an additional payment by the beneficiary and they have become quite popular, currently covering about 15 million people or almost 30% of all Medicare recipients.  A Kaiser Family Foundation report describes trends in Medicare Advantage offerings in 2014.   (KFF Report)  2014 is an important year for Medicare Advantage because Congress and CMS have begun to reduce payments to the MA plans because of a perception that they are costing more than fee-for-service Medicare would for the same beneficiary.  The Kaiser report finds that in 2014, the total number of MA plans will be 2014 (is that confusing and coincidental!) down by 60 from 2013.  People in urban areas will have on average 20 plans to choose from and those in rural areas, 11, both down slightly.  About 5% of current MA enrollees will have to change plans but almost all of these will be able to find a similar plan.  Average monthly premiums for 2014 are a little lower than for 2013, but if enrollees stay with their current plan, they will see an average $5 per month increase.  Almost all beneficiaries will have access to a zero premium plan.  While premiums may seem relatively stable, out-of-pocket cost limits will increase from an average of $4333 in 2013 to $4797 in 2014 and 41% of plans will have an out-of-pocket limit of $5000 or more.  Other cost-sharing features were not explored.  Humana, United Healthcare and the Blue Cross Blue Shield plans are the major players, with Aetna, Cigna and Kaiser also having significant market share.  Almost all MA plans offer drug coverage and many go beyond the required Part D coverage.  Overall the picture that is painted is continuing good access to competing plans; slightly rising premiums for the same plan, but lessening benefits and more cost-sharing.  Although the report does not address this, many plans are also narrowing their networks for 2014, another cost-saving measure that may inconvenience beneficiaries.  It is fairly clear that the plans are preparing for more significant reimbursement reductions in future years by beginning to hone benefit designs, networks and service areas now.