The Medicare and Medicaid Services department has issued a preliminary report in which insurance analysts calculate cuts to the Medicare Advantage program would equal 1.9% for 2015. This figure is based on analysis of a 148 cost assessment report for the private pay Medicare Advantage plan issued by Medicare.
The final rates will be released on April 7, 2014 to be effective in 2015.
What is Medicare Advantage?
Medicare Advantage is a privately purchased insurance plan which offers Part A and Part B of Medicare with increased benefits not included with Medicare. These benefits may include vision, dental and prescription coverage; however the details of each plan along with the cost varies per insurance provider.
Part A covers “services” such as surgeries, tests, physician visits, supplies, skilled nursing care, nursing home, hospice and home health services.
Part B covers services considered medically necessary to treat a condition or disease. Services including: ambulance, durable medical equipment, clinical research, inpatient and outpatient mental health services.
Part D covers prescription drugs. Part D can be purchased separately or is included in a Medicare Advantage Plan.
How Does Medicare Advantage Work?
Participants privately purchase a plan from an insurance provider. While the services exceed the traditional Medicare plans, choices of doctors and networks may be restricted according to the types of plan purchased and location of participant. Co-payments, premiums and deductibles also vary per Medicare Advantage plan.
Types of Medicare Advantage Plans
- Health Maintenance Organization (HMO)
- Participating Provider Organization (PPO)
- Private Fee-for-Service (PFFS)
- Special Needs Plan (SNP)
- Health Maintenance Organization Point Of Service (HMOPOS)
- Medical Savings Account (MSA)
Who Pays For A Medicare Advantage Plan?
The Medicare Advantage plan is paid for privately by the participant. The private insurance company contracts with Medicare to provide Part A and Part B coverage plus the additional
How Does The Rate Affect The Consumer?
Insurance analysts along with Medicare are speculating rates paid to insurance companies by Medicare would decrease by 1.9%. This is due in part to the Affordable Care Act (ACA); $719 billion dollars in Medicare reductions are scheduled to phase in over the next 10 years.
Insurance companies will be receiving less money from Medicare services due to the proposed cuts. Whether the costs to insurance companies would be passed on to the consumer would be at the discretion of the insurance companies.
Unitedhealthcare and Humana currently comprise 40% of the market. Avalere Health states that consumers participating in Medicare Advantage continues to increase. Between 2013 and 2014 participation rose by 8.9% with approximately 15.9 million participants in 2014. Thirty percent of Medicare participants purchase Medicare Advantage.
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