What is Medicare Advantage?

by Barbara Parrott McGinity, LMSW

 

When President Bush signed the Medicare Modernization Act (MMA) of 2003, it put into law what is known as Medicare Part D. Most people thought the act was merely about adding a prescription drug benefit to Medicare, but the act also included an expansion of Medicare Part C, more commonly referred today as Medicare Advantage (MA).

What exactly is Medicare Advantage? In simple terms, it is Medicare managed care. This managed care is through private insurance companies who provide Part A coverage, Part B coverage, and other medically necessary services just like under original or traditional Medicare. These companies receive a set amount of money each month for each beneficiary they have enrolled which they use to “manage” their healthcare. Medicare must approve all companies and plans.

In the past, Medicare Part C was primarily companies who offered managed care under an HMO, or health management organization. The MMA of 2003 allowed for private insurance to offer a wider range of Medicare managed care plans that look more like plans available to the general population like PPOs or Preferred Provider Organizations. The idea was to give Medicare beneficiaries more flexibility and greater control, but this has also lead to a great deal of confusion on the part of beneficiaries, caregivers and professionals who work with this population.

Here is a brief overview of different types of plans:

Health Maintenance Organization (HMO)
Plans must cover all Part A and Part B health care. Most require you to go to doctors, specialists, or hospitals on the plan’s list, except in an emergency.

Preferred Provider Organization (PPO)
Plans are available in a local or regional area and you may pay less if you use doctors, hospitals,
and providers in their network, but pay additional costs for outside network visits.

Medical Savings Account (MSA)
Plans combine a high deductible health plan with a Medical Savings Account that beneficiaries
can use to manage their healthcare costs.

Private Fee-for-Service (PFFS)
Plans allow you to go to any doctor or hospital that accepts the plan’s payment. The plan decides how much it will pay and what you will pay for the services you receive.

Medicare Special Needs (SNP)
Plans are specially designed to meet the needs of people who live in certain institutions, are eligible for both Medicare and Medicaid, and/or have one or more chronic conditions.

To add to the complexity of understanding the different plans, you also have to understand how prescription drug coverage works with the MA plans. Some plans have prescription drug plan (PDP) as part of their benefit and these are called MA-PDP. Or beneficiaries can buy a separate PDP and then enroll in a MA plan that does not have drug coverage, and these do not have to be through the same company.

As we approach the enrollment periods for both prescription drug plans and Medicare Advantage plans, beneficiaries will be getting phone calls and information from people wanting to “help” them learn about the “new” Medicare products. Over the past two years we have seen lots of confusion, misrepresentation, people getting into plans they don’t understand, and an overall frustration by many about the overwhelming choices they face.

It is important that people realize that changes to their Medicare coverage are serious. Anyone looking at making a change needs to ask questions and make sure they are comfortable with the answers. They need to take their time, this is not a decision they have to make immediately. Most importantly, before enrolling they should consult with a trusted family member, friend or their doctor to make sure their current healthcare needs will continue to be meet by any new plan they are considering.

If you have any questions or would like some guidance in navigating these waters, feel free to contact me at 713-341-6184.

Barbara Parrott McGinity, LMSW
Program Director
Better Business Bureau Education Foundation