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Medicare Advantage Enrollment

By January 26, 2015Commentary

Under the Medicare Advantage program, CMS pays health plans a set fee to provide all Medicare services for beneficiaries who enroll with the plan.  Many of the Medicare Advantage plans offer additional benefits or reduced cost-sharing to their enrollees.  Despite decreaseded payments to the plans in recent years, Medicare Advantage enrollment has continued to surge, now accounting for 30% of all beneficiaries.  A study in Health Affairs examines where these enrollees are coming from.   (HA Article)  Using Medicare data from 2006 through 2011, the researchers examined enrollment trends.  One finding was that in 2011, a relatively small set of beneficiaries, 22%, selected an MA plan on first becoming eligible for Medicare, but this was up from the 15% who chose an MA plan in 2006 when they entered Medicare.  Beneficiaries switching from fee-for-service Medicare to an MA plan accounted for 78% of new MA enrollment in 2006 and conversely, 22% were newly-eligible seniors.  By 2011, 52% of new MA members were switching from fee-for-service and 48% were people just becoming eligible for Medicare.  As a percent of all beneficiaries, each year in the study around 3% to 4.5% switched from fee-for-service to MA and around 4% to 5% switched from MA to traditional Medicare.  A larger percent of Medicare recipients under age 65 who are in the program because they are disabled switched from MA to fee-for-service.  Dual-eligibles, those persons also enrolled in Medicaid, also made the switch to fee-for-service at higher rates.  Younger beneficiaries, particularly those in the 65-69 age group, were more likely to change from fee-for-service to MA.  The good news for MA plans is that it appears that now almost half of new Medicare beneficiaries are selecting MA.  This is likely due to the fact that many people now reaching the age of 65 have spent much of their adult lives enrolled in managed care plans and are very comfortable with the more restricted provider networks and utilization management features of these plans, and appreciate the additional benefits and lower cost-sharing.  And this is good for CMS, quality of care is generally better in the MA plans and, if properly managed, costs should be lower.

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