We can expect enrollment in Medicare Part C, or Medicare Advantage (MA), to continue its two-decade long trend of growth. According to the Kaiser Family Foundation (KFF), MA enrollment in 2023 was 30.8 million or 51% of eligible beneficiaries.1 The Congressional Budget Office estimates that enrollment will rise to about 61% of eligible beneficiaries by 2032;2 the growth can be attributed to the strong financial incentives Congress created for plans in the Medicare Modernization Act of 2003. In 2023, more beneficiaries elected MA plans instead of traditional Medicare, with significant ramifications for providers.
Of note, the reimbursement and covered services for MA plans can be different from Medicare Part B plans. This article helps to outline the difference between the two programs and hopefully help your practice decrease the administrative burden of insufficient claims.
A LITTLE BACKGROUND
Medicare Part C, or Medicare Advantage, are health plans offered by private companies approved by Medicare. These plans provide all the Part A (Hospital Insurance) and Part B (Medical Insurance) coverage and may offer extra coverage, with additional benefits and services that traditional Medicare does not cover, such as:
- Routine dental exams, cleanings, X-rays and dentures
- Hearing aid exam, hearing aid fitting and a discount on hearing aids
- Routine vision exam and an allowance for eyeglasses and contact lenses
- Emergency medical assistance while traveling outside the United States
- Fitness memberships
- An allowance to buy health-care products.
These plans frequently include Part D prescription drug coverage with no or low copays. MA plans are heavily promoted to Medicare beneficiaries, while ordinary or Part A/B Medicare is not promoted, so many beneficiaries assume these MA plans are their best option.
According to KFF, “The share of Medicare beneficiaries enrolled in Medicare Advantage varies widely across counties. In 2023, nearly one-third (31%) of Medicare beneficiaries live in a county where at least 60% of all Medicare beneficiaries are enrolled in Medicare Advantage plans, while 10% live in a county where less than one-third of all Medicare beneficiaries are enrolled in Medicare Advantage plans.”1
A few firms dominate MA plans. A KFF analysis found that UnitedHealthcare and Humana make up fully 47% of all Medicare Advantage enrollees. Moreover, “in nearly a third of counties (32%; or 1,013 counties), these two firms account for at least 75% of Medicare Advantage enrollment.”1 The financial rewards to the payor are substantial. Payments to MA plans are higher than traditional Medicare for several reasons, including bonuses, rebates and risk adjustments.3 Not surprisingly, this has led to substantial profits as demonstrated by UnitedHealth Group extending its streak as the most profitable company among major national insurers in the first quarter of 2023, reporting $5.6 billion in earnings.4
PART C AND PROVIDERS
The story is different for providers. MA plans may set their own payment rates; they don’t have to follow the Medicare Physician Fee Schedule. Based on a study published in JAMA Internal Medicine, “Physician reimbursement in MA is more strongly tied to traditional Medicare than to commercial prices, but MA plans take advantage of favorable commercial prices for services for which traditional Medicare overpays.”5
A CMS booklet for beneficiaries says, “Each Medicare Advantage Plan can charge different out-of-pocket costs and have different rules for how you get services (like whether you need a referral to see a specialist or if you have to go to only doctors, facilities, or suppliers that belong to the plan for nonemergency or non-urgent care). These rules can change each year.”6
Significantly, MA plans have their own policies for processing claims for reimbursement. Covered diagnoses vary from traditional Medicare. For some services, prior authorizations may be required, which is not typically the case for Part B Medicare. CMS prohibits MA plans from using the Advance Beneficiary Notice of Noncoverage, or ABN; instead, predetermination of benefits by the provider or beneficiary is the method used when coverage is in doubt.
MA plans feature a wide variety of offerings. Some cap out-of-pocket beneficiary expenditures on an annual basis for covered services, while Part B Medicare does not.
KEY ADMINISTRATIVE PRACTICES
Our experience with claims for reimbursement with MA plans is very different from traditional Medicare. Assessing coverage is more difficult; denied claims are not easily addressed; administration is frequently more time consuming; maintaining preferred provider status can be challenging; contracting requires serious effort and creativity. Administrators or practice managers should:
- Devote significant effort to contracts and negotiations with MA plans
- Collect and analyze outcomes data to demonstrate quality of care
- Establish administrative processes consistent with MA plan requirements.
KEEP A WATCHFUL EYE ON MA PLANS
Enrollment in MA plans continues to increase with significant implications for providers. These plans use different administrative processes than traditional Medicare and may have lower payment rates. MA plans generate surprises for billers such as coverage of routine eye exams and refractions. Access to beneficiaries depends on retention of your physicians on MA panels of preferred providers. As enrollments of Medicare beneficiaries shift away from traditional Medicare toward MA plans, time and attention needs to be devoted to this strategic change. OM
REFERENCES
1. Ochieng N, Biniek JF, Freed M, et al. Medicare Advantage in 2023: Enrollment update and key trends. Kaiser Family Foundation. Aug. 9, 2023 https://www.kff.org/medicare/issue-brief/medicare-advantage-in-2023-enrollment-update-and-key-trends. Accessed April 15, 2023.
2. Neprash HT, Mulcahy JF. The extent and growth of prior authorization in Medicare Advantage. The Amer J of Managed Care. March 2024;30:e85-e92. https://www.ajmc.com/view/the-extent-and-growth-of-prior-authorization-in-medicare-advantage. Accessed April 16, 2024.
3. Binkiek JF, Cubanski J, Neuman T. Higher and faster growing spending per Medicare Advantage enrollee adds to Medicare’s solvency and affordability challenges. Kaiser Family Foundation. Aug. 17, 2021. https://www.kff.org/medicare/issue-brief/higher-and-faster-growing-spending-per-medicare-advantage-enrollee-adds-to-medicares-solvency-and-affordability-challenges. Accessed April 15, 2024.
4. Minemyer P. UnitedHealth extends its hot streak as the most profitable payer in Q1. Fierce Healthcare. https://www.fiercehealthcare.com/payers/unitedhealth-extends-its-hot-streak-most-profitable-payer-q1#:~:text=UnitedHealth%20Group%20extended%20its%20streak,reporting%20%245.6%20billion%20in%20earnings. Accessed April 15, 2024.
5. Trish E, Ginsburg P, Gascue L, Joyce G. Physician reimbursement in Medicare Advantage compared with traditional Medicare and commercial health insurance. JAMA Intern Med. 2017 Sep 1;177:1287-1295. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5710575. Accessed April 15, 2024.
6. Medicare.gov. Understanding Medicare Advantage Plans. https://www.medicare.gov/Pubs/pdf/12026-Understanding-Medicare-Advantage-Plans.pdf. Accessed April 15, 2024.
