Medicare Advantage
Consumer Protections and Ongoing Challenges
for Beneficiaries
Tricia Neuman, ScD
Vice President, Kaiser Family Foundation
Director, Medicare Policy Project
AcademyHealth
June 2009
Exhibit 1
The diverse needs and circumstances
of the Medicare population
Percent of total M edicare population:
Income <200% FPL
($20,800 in 2008)
46%
3+ Chronic Conditions
38%
Cognitive/Mental
Impairment
29%
Fair/Poor Health
28%
Ever visited
Medicare.gov
19%
17%
2+ADL Limitations
Under-65 Disabled
Age 85+
16%
12%
NOTE: ADL is activities of daily living.
SOURCE: Income data for 2007 from U.S. Census Bureau, Current Population Survey, 2008 Annual Social and Economic Supplement.
All other data from Kaiser Family Foundation analysis of the Centers for Medicare & Medicaid Services Medicare Current Beneficiary
Survey, Access to Care file, 2006.
Exhibit 2
Evolution of Private Plans Under Medicare
Choices before
1997…
Local HMO
Local PPO
Traditional
Fee-for-service
Medicare
Private
Fee-ForService
Provider
Sponsored
Organization
Medical
Savings
Account
Regional
PPO
More
choices added
in 1997…
Special
Needs
Plan
Standalone
Prescriptio
n Drug Plan
…and even
more
choices
added
in 2003
Exhibit 3
Someone’s dad has a choice of
Traditional Medicare and
34 Medicare Advantage Plans in Baltimore County
TEN
PFFS Plans
EIGHT
HMOs
TWO
Traditional
Medicare
Local PPOs
FIVE
Cost Plans
THREE
Regional PPOs
TWO
HMOS with
POS Option
FOUR
SNPs
Exhibit 4
Comparison of Beneficiaries’ Experiences in
Traditional Medicare and Medicare Advantage, 2006
Mammography in
the past year
Blood test for
prostate cancer
Medicare Advantage
Traditional Medicare
54%
52%
73%
69%
*
Flu shot last year
67%
69%
Pneumonia shot
ever
69%
67%
Satisfied with outof-pocket costs
83%
81%
Satisfied with
quality of care
received
NOTE: Asterisks (*) denote characteristics that are statistically significantly different at the p<0.05 level.
SOURCE: Kaiser Family Foundation analysis of the Medicare Current Beneficiary Survey, Access to Care file, 2006.
*
95%
94%
*
Exhibit 5
Choice Matters: Wide range in estimated out-ofpocket spending across Medicare Advantage plans
(Case Example: Age 80-84, poor health, Baltimore County, MD)
Lowest cost plan:
$2800
$8,000
Highest cost plan:
$7900
$7,000
$6,000
$5,000
$4,000
$3,000
$2,000
$1,000
$0
a
b c
d e
f
g h
i
j
k
l
m n o p q
SOURCE: Kaiser Family Foundation analysis of www.Medicare.gov Plan Finder, 2009.
r
s
t
u v w x
Traditional
Medicare:
$6200
y
z aa ab ac ad
Exhibit 6
What varies across plans?

Premiums (in addition to Part B)


Cost-sharing


About two thirds have a limit on out-of-pocket spending (Gold)
Variations in out-of-pocket spending limits


Sometimes higher than traditional Medicare (e.g. daily hospital
copayments; home health copayments)
Presence of out-of-pocket spending limits


In Baltimore County, premiums range from $0 to $2,245/year
As likely to be above $5,000 as below $2,500 (Gold for AARP, 2009)
MA Part D benefits also vary

e.g., coverage in the “doughnut hole”
Exhibit 7
Medicare Advantage Prescription Drug Plans,
By Type of Gap Coverage, 2009
Few
generics/
brands:
12%
No Gap
Coverage:
49%
Some
Generics
Only: 25%
Generics Only: 9%
All Brands and
Generics: 1%
All Generics and
Some Brands*: 4%
* In 2009, includes plans covering fewer than all generics along with some or few brands.
SOURCE: Hoadley et al analysis of CMS MA landscape files, 2006-2009, for the Kaiser Family Foundation.
Exhibit 8
Are seniors making “good” plan choices?
Insights from Part D


Study 1: Less than 10% of Part D enrollees signed up for the
lowest-cost plan in 2006, based on the specific drugs they were
taking in 2005. (Gruber 2008)
Study 2: After asking participants to choose among 3, 10, or 20
hypothetical drug plans, the number of plans and old age were
significantly associated with fewer correct answers

Older adults were less likely to identify the plan that minimized
total annual costs, though more likely to say they were "very
confident" in their choice.
(Hanoch, Rice, Cummings, and Wood 2009)
Exhibit 9
Even with proposed simplifications,
beneficiaries will have many choices –
in addition to Traditional Medicare
Number of
plans
affected
Number of
plans
remaining
nationally
Number of
enrollees
affected
Mean number
of plans
available per
beneficiaries
Require at least 10
enrollees per plan
461
2,274
291,065
38
Require at least
100 enrollees per
plan
923
1,812
311,377
32
Limit contracts to
no more than two
Medicare
Advantage drug
plans per MSAs
639
2,096
315,741
38
Source: M. Gold, Mathematica Policy Research, Inc for the Kaiser Family Foundation, forthcoming.
Exhibit 10
Recent Changes in Policy:
Reducing the Number of Plans



Insurers are “encouraged” but not required to
eliminate plans with low enrollment
Insurers are “encouraged” to limit plans that are
duplicative of other plans they offer, and do more to
make differences transparent to enrollees (e.g., cite
specific supplemental benefits, drug coverage, etc.)
“Expectation” that sponsors offer no more than
three MA plans of each plan type in each market
Exhibit 11
Other Policy Changes

Benefits

CMS will review plans with relatively high cost-sharing and will
“likely” not consider coinsurance to be discriminatory if:




the plan caps out-of-pocket spending at $3,400
A/B services are not carved out from the plan’s out-of-pocket cap
cost-sharing for certain services are not higher than amounts charged
under traditional Medicare
Marketing




Plans required to confirm type of plan in marketing materials by
January 1, 2010
Plans must use uniform language to describe variations in drug
coverage in the gap
New limits on agent commissions
Door to door marketing prohibited (MIPPA)
Exhibit 12
Key Provisions in Draft House Health Reform Bill

Prohibits plans from charging more for services covered
under Parts A and B than Traditional Medicare

Limits cost-sharing for dual eligibles in plans

Requires plans to meet minimum loss ratios

Gives Secretary more authority to audit plans


Phases in coverage in the doughnut hole for all Part D plans,
including Medicare Advantage plans with prescription drug
coverage
Reaffirms Secretary not required to accept all bids
Exhibit 13
Ongoing Issues and Options

Further simplifying the marketplace




Marketing




Number/type of plans
Variations in benefits
Plan names – uniform terms to convey level of generosity (e.g.
bronze/silver/gold)
Further limits on overly aggressive sales tactics
Basic information to include in marketing materials and ads
included in call letter
Plans market to all beneficiaries, including under-65 disabled
Strengthening consumer supports



1-800 Medicare
Medicare.gov
State Health Insurance Counseling Programs