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Medicare Advantage Out-of-Pocket Costs

By November 18, 2024Commentary

More than half of all Medicare beneficiaries are now enrolled in Medicare Advantage, which is made up of private health plans.  MA has become attractive in large part because it offers extra benefits and lower costs to beneficiaries.  And most Medicare beneficiaries spent a large part of their life enrolled in private health plans, so there is lack of anxiety and a sense of continuity in going to Medicare Advantage.  MA plans have been under attack recently for certain practices relating to how payments to them are calculated.  These concerns are well-founded, as the plans routinely over-code the health status of enrollees and other aspects of the formula make no sense.  The federal government should reform the payment method, which would save billions of dollars.  Concerns have also been raised about the use of prior authorization and other utilization management techniques.  Fee-for-service Medicare, however, is full of abuse and waste–doctors basically do whatever they want with few controls.

The positives for Medicare Advantage are that enrollees get all kinds of extra benefits–cheap dental care, vision care, travel aid to appointments; and they pay less.  A new study in Health Affairs finds that on average out-of-pocket costs, which included the Medicare deductible and coinsurance and copayments, were 18% to 24% less for MA members than for those in traditional Medicare.  These out-of-pocket costs can be a substantial barrier to care.  And studies continue to show that MA delivers better quality across a wide range of metrics.  So the program needs reform, but all Americans would likely be better off if they were in an MA plan.  (HA Study)

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  • David Pauls says:

    Kevin,
    Overall I would concur but the biggest hurdle right now for Medicare Advantage is the there a paucity of providers within the PPO networks. In our area, many of the smaller rural hospital do not contract with any of the plans and the larger regional hospital here only has a couple of contracts. Patients are finding that they have to private pay or drive significant distances to get in network care. There were some fee for service plans without a specific network but those have evaporated away in this state.

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