Medicare Advantage or Just Medicare?

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The sales pitches show up in your mailbox and inbox, in robocalls and texts. Ads target you on radio and television and social media. Touting Medicare Advantage plans, these campaigns promise low premiums and all kinds of extra benefits.

And they work. The proportion of eligible Medicare beneficiaries enrolled in Medicare Advantage plans, funded with federal dollars but offered through private insurance companies, has hit 48 percent. By next year, a majority of beneficiaries will probably be Advantage plan enrollees.

The annual enrollment period is once again underway. Beginning last month and until Dec. 7, beneficiaries can switch from traditional Medicare to Medicare Advantage or vice versa, or switch between Advantage plans. So it’s a good moment to look at the differences between these two approaches.

“It’s a very consequential decision, and the most important thing is to be informed,” said Jeannie Fuglesten Biniek, senior policy analyst at the Kaiser Family Foundation and co-author of a recent literature review comparing Advantage and traditional Medicare.

A key finding, Dr. Biniek said: “Both Medicare Advantage and traditional Medicare beneficiaries reported that they were satisfied with their care — a large majority in both groups.”

Examining 62 published studies, the researchers found that Advantage plans performed better on a few measures. For instance, beneficiaries were more likely to use preventive services such as the annual wellness visit and flu and pneumonia vaccinations. Advantage beneficiaries were also more likely to say that they had a doctor, a “usual source of care.”

Traditional Medicare beneficiaries, on the other hand, experienced fewer affordability problems if they had supplementary Medigap policies, but worse affordability problems if they didn’t. And they were more likely to use high-quality hospitals and nursing homes.

None of these differences, however, have prompted widespread shopping or shifting between the programs in either direction. (Dozens of lawsuits accusing some Medicare Advantage insurers of fraudulently inflating their profits have apparently not made much difference to consumers, either.)

A prime rationale for Advantage plans is that consumers can compare them to find the best individual coverage. But in 2020, only three in 10 Medicare beneficiaries compared their current plans with others, a Kaiser Family Foundation survey reported.

Even fewer beneficiaries changed plans, which may reflect consumer satisfaction or the daunting task of trying to evaluate the pluses and minuses. This year, the average beneficiary can choose from 38 Advantage plans, the Commonwealth Fund reports.

Yet Medicare Advantage and traditional Medicare, also known as original or fee-for-service Medicare, operate quite differently, and the health and financial consequences can be dramatic.

Advantage plans offer simplicity. “It’s one-stop shopping,” Dr. Biniek said. “You get your drug plan included and you don’t need a separate supplemental policy,” the kind that traditional Medicare beneficiaries often buy.

Medicare Advantage may appear cheaper because many plans charge low or no monthly premiums. Unlike traditional Medicare, Advantage plans also cap out-of-pocket expenses. Starting next year, beneficiaries will pay no more than $8,300 in in-network expenses, excluding drugs — or $12,450 with the kind of plan that also permits participants to use out-of-network providers at higher costs.

Only about one-third of Advantage plans allow that choice, however. “Most plans operate like an H.M.O. — you can only go to contracted providers,” said David Lipschutz, associate director of the Center for Medicare Advocacy.

Advantage enrollees may also be drawn in by benefits that traditional Medicare can’t offer. “Vision, dental and hearing are the most popular,” Mr. Lipschutz said, but plans may also include gym memberships or transportation.

“We caution people to look at what the scope of the benefits actually are,” he added. “They can be limited or not available to everyone in the plan. Dental care might cover one cleaning and that’s it, or it may be broader.” Most Advantage enrollees who use these benefits still wind up paying most dental, vision or hearing costs out of pocket.

As for traditional Medicare, “the big pro is that there are no networks,” Dr. Biniek said. “You can see any doctor that accepts Medicare, which is just about any doctor,” and use any hospital or clinic.

Traditional Medicare beneficiaries also largely avoid the delays and frustrations of “prior authorization.” Advantage plans require this advance approval for many procedures, drugs or facilities.

“Your doctor or the facility says that you need more care” — in a hospital or nursing home, say — “but the plan says, ‘No, five days, or a week, or two weeks, is fine,’” Mr. Lipschutz said. The patient must either forgo care or pay out of pocket.

Advantage participants who are denied care can appeal; when they do, the plans reverse their denials 75 percent of the time, according to a 2018 report by the Department of Health and Human Services’ Office of Inspector General. But only about 1 percent of beneficiaries or providers file appeals, “which means there’s a lot of necessary care that enrollees are going without,” Mr. Lipschutz said.

Another Office of Inspector General report this spring determined that 13 percent of services denied by Advantage plans met Medicare coverage rules and would have been approved under traditional Medicare.

Although people can switch between Medicare Advantage plans fairly easily, switching from traditional Medicare to Advantage involves a major caveat.

Because traditional Medicare sets no cap on out-of-pocket expenses, the 20 percent co-pay can add up quickly for hospitalizations or expensive tests and procedures. Most beneficiaries therefore rely on supplemental insurance, also called Medigap policies, to cover those costs; either they buy a policy or they have supplementary coverage through an employer or Medicaid.

Beneficiaries who leave traditional Medicare for Medicare Advantage plans give up those Medigap policies. If they later grow dissatisfied and want to return to traditional Medicare, insurers may deny their Medigap applications or charge high prices based on factors like pre-existing conditions.

“Many people think they can try out Medicare Advantage for a while, but it’s not a two-way street,” Mr. Lipschutz said. Except in four states that guarantee Medigap coverage at set prices — New York, Massachusetts, Connecticut and Maine — “it’s one type of insurance that can discriminate against you based on your health,” he said.

David Meyers, a health services researcher at Brown University, and his colleagues have been tracking differences between original Medicare and Medicare Advantage for years, using data from millions of people.

The team has found that Advantage beneficiaries are 10 percent less likely to enter the highest-quality hospitals, 4 to 8 percent less likely to be admitted to the highest-quality nursing homes and half as likely to use the highest-rated cancer centers for complex cancer surgeries, compared with similar patients in the same counties or ZIP codes.

In general, patients with high needs — they were frail, were limited in their daily living activities or had chronic conditions — were more likely to switch to traditional Medicare than those without high needs.

Why was that? “When you’re healthier, you may run into fewer of the limitations of networks and prior authorization,” Dr. Meyers hypothesized. “When you have more complex needs, you come up against those more frequently.”

Trying to figure out which kind of Medicare, including a Part D drug plan, is actually to your advantage can be difficult even for knowledgeable consumers. Advantage plan networks change frequently; doctors and hospitals that are in-network this year may be out the next. Drug formularies change, too. A new Senate report documented deceptive marketing and advertising practices that added to the confusion, prompting Medicare to promise increased policing.

The best allies, along with Medicare’s website and its toll-free 1-800-MEDICARE number, are the federally funded State Health Insurance Assistance Programs, whose trained volunteers can help people assess Medicare and drug plans.

These state programs “are unbiased and don’t have a pecuniary interest in your decision making,” Mr. Lipschutz said. But their appointments tend to fill up fast at this time of year. Don’t delay.

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