Medicare Part C – Medicare Advantage (MA)

Medicare Part C, or Medicare Advantage (MA) is an alternative to “Original Medicare”. Original Medicare is the traditional fee-for-service Medicare plan for Part A and/or Part B, whereas MA is an option that beneficiaries can choose instead of Original Medicare. Medicare Advantage is provided by Medicare-approved private insurance companies, such as Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), private fee-for-service (FFS) plans, special needs plans (SNPs), and Medicare Medical Savings Account (MSA) plans. A beneficiary can add prescription drug coverage to Medicare Advantage. An MA plan that includes Part D is typically called Medicare Advantage Prescription Drug (MA-PD) (Glossary, n.d.; How to get drug coverage, n.d.; Your Medicare coverage, n.d.).

Enrollment in Medicare Advantage instead of Original Medicare has been increasing. Beneficiaries generally choose MA plans because they can receive better, higher-quality services, as well as additional benefits that Original Medicare does not provide (even when Medigap is included). Furthermore, MA plans have a different approach to health care delivery than traditional FFS Medicare. For example, instead of just treating seniors when they are sick, MA plans put a major emphasis on preventive health services, early disease detection, and avoiding illnesses where possible (Seniors to lose benefits, 2014). In fact, “research has shown that beneficiaries in Medicare Advantage plans receive higher quality care, are subject to fewer preventable hospital re-admissions and are less likely to have potentially avoidable hospital admissions” (Seniors to lose benefits, 2014, para. 8). Therefore, those seniors who choose MA plans generally express higher satisfaction with their coverage and their benefits than seniors with Original Medicare (Seniors to lose benefits, 2014). Besides the quality of care and added benefits, “analysis of federal data shows that Medicare Advantage is an important option for low-income and minority Medicare beneficiaries” (Seniors to lose benefits, 2014, para. 7). Due to the benefits of an MA plan, over 15 million Medicare beneficiaries (approximately 29%) have chosen to enroll in Medicare Advantage (Seniors to lose benefits, 2014).

It is important for beneficiaries to know that if they want an Advantage plan, they must have Part A and Part B coverage (How to get drug coverage, n.d.). In addition, MA plans are required to offer a minimum of the same Part A and Part B coverage as Original Medicare (GAO, 2011; Korn & Stone, 2013). The major benefit of choosing an MA plan is that you will have added coverage than you would if you had an Original Medicare plan, such as extra days in the hospital, lower coinsurance/copayments, lower deductibles, long-term care, and other benefits not provided by Original Medicare. The exact coverage and costs associated with your MA plan depend on the plan you choose based on your needs (Learn about, 2012; SSA, 2013).

The down-side to choosing Medicare Advantage is that adding coverage comes with higher premiums. For example, if you qualify to receive premium-free Part A from original Medicare, you would likely have to pay a premium for this under Medicare Advantage. Again, the premium amount is related to the coverage and benefits chosen. Therefore, you can choose the best balance for your needs. In addition, since MA plans typically cover the same (and more) gaps in coverage as Medigap, you are not allowed to purchase Medigap in addition to an MA plan. You can only purchase Medigap if you have Original Medicare (SSA, 2013). Another potential downside to Medicare Advantage is that the plan may limit your network of providers (Learn about, 2012; What is Medicare, 2011). This is another issue that should be discussed with an MA plan before you sign up to make sure your preferred provider is included in the network. It is also important to be aware that if you have MA coverage that includes Part D and then you sign up for Part D under Original Medicare, you will be automatically disenrolled from Medicare Advantage (How to get drug coverage, n.d.).

Medicare Advantage Special Needs Plans (SNPs). A major sub-sector of Medicare Advantage are Special Needs Plans (SNPs). As of December, 2013, almost 1.9 million people were enrolled in SNPs (The Menges Group, 2014). These plans first began as part of the Medicare Modernization Act (MMA) of 2003 and were established to provide care for individuals with unique special needs. This resulted in three types of SNP plans (CMS, 2011a; CMS, 2014c). The first is an I-SNP, which is for institutionalized Medicare beneficiaries. An I-SNP “restricts enrollment to MA eligible individuals who, for 90 days or longer, have had or are expected to need the level of services provided in a long-term care skilled nursing facility (LTC SNF), a long-term care nursing facility (LTC NF), an SNF/NF, an intermediate care facility for the mentally retarded (ICF/MR), or an inpatient psychiatric facility” (CMS, 2014c, p. 11).

The second type of SNP is for individuals with severe or disabling chronic conditions, called C-SNPs. Since there are many types of chronic conditions (i.e. diabetes, cancer, Parkinson’s, Major Depression, etc.), there are C-SNPs that treat people with a specific disease type only (CMS, 2011a; CMS, 2014c; DHHS, 2011), or for co-morbid groups of diseases, such as conditions that typically go hand-in-hand. For example, a person on Medicare with diabetes can join a C-SNP that targets a population for diabetes care, but cannot join a C-SNP that is targeted for a population that has severe mental health issues, unless they have both chronic conditions (CMS, 2014c).

The third type is a dual-eligible special needs plan (D-SNP), which is for beneficiaries who are dual-eligible for both Medicare and Medicaid. As of December 2013, approximately 1.5 million beneficiaries were enrolled in some type of D-SNP plan, which is only 15% of the total population of enrollees eligible to enroll in a D-SNP (Dual eligible special needs, 2013). There are many types of D-SNPs, depending on the level of Medicaid coverage the beneficiary is eligible for. As of 2014, the five major types of D-SNPs are “all-dual”, “full-benefit”, “Medicare Zero Cost Sharing”, “Dual Eligible Subset”, and “Dual Eligible Subset Medicare Zero Cost Sharing”. In addition, the Patient Protection and Affordable Care Act created a new type of D-SNP called FIDE (fully-integrated dual-eligible) SNPs (CMS, 2014c). FIDE SNPs are very similar to D-SNPs except they have to comply with specific federal regulations in order to be designated as a FIDE SNP. For example, one of these requirements is that they have to “coordinate the delivery of covered Medicare and Medicaid health and long-term care services, using aligned care management and specialty care network methods for high-risk beneficiaries” (CMS, 2014c, p. 17). If a D-SNP plan complies with the regulations and applies for FIDE SNP status, they become eligible for frailty payment adjustments (CMS, 2014c; Dual eligible special needs, 2013).

When Special Needs Plans were first established, the program was authorized to operate until December of 2008. Since then, Congress has extended authorization for these programs as needed. The ACA originally extended the program until December 31, 2013; however, it was subsequently extended until December, 2014 and is now extended again until January, 2016 (CMS, 2011a; CMS, 2014c; The Menges Group, 2014). If authority does expire for SNPs and they are not extended, these programs will be required to operate in the same way as other Medicare Advantage plans or discontinue operations altogether (Dual eligible special needs, 2013).

Beneficiaries should know that SNPs are only a part of Medicare Advantage, not Original Medicare. However, these plans are required to cover all services that are covered by Original Medicare Parts A and B. In addition, SNPs are required to carry a Part D plan. The prescription drugs covered under the Part D plan may vary, though, depending on the type of SNP you join. For example, if you join a C-SNP for diabetes, the plan is likely to have better coverage for diabetes medications and supplies than other Medicare plans. The out-of-pocket costs for participating in an SNP also vary widely depending on eligibility, the type of SNP you are enrolled in, and where you live (DHHS, 2011).

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