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Upon turning 65 or retiring, Americans face a major choice: Go with traditional Medicare or sign up for Medicare Advantage? In commercials featuring celebrities like retired Los Angeles Lakers point guard Earvin “Magic” Johnson, insurance companies strongly push the latter.
There are tradeoffs between traditional Medicare and Medicare Advantage, and parsing out the differences is often confusing. To discuss the two options, How We Care spoke with Tricia Neuman of KFF, who heads the health policy organization’s Medicare research.
In this interview, which has been condensed for clarity and length, Neuman explains what factors older Americans and their caregivers should consider before choosing Medicare coverage and the stakes of these decisions.
Spotlight PA: Can you explain the differences between Medicare Advantage and traditional Medicare?
Neuman: Traditional Medicare is what people think about as the national program that provides Medicare benefits.
Medicare Advantage are plans that are run by private insurance companies like UnitedHealthcare and Humana that receive a payment from the federal government to provide benefits to people on the program. So one is a public option, and the other is a privatized version.
Basically, the federal government gives insurance companies money to provide Medicare Advantage.
When you turn 65, you see lots of ads on TV for Medicare Advantage plans, and … you don't see ads for traditional Medicare. So a lot of people are drawn to Medicare Advantage, and for many good reasons.
What are some of those good reasons? I know that a lot of Medicare Advantage plans have dental and vision included, while traditional Medicare doesn’t.
The extra benefits are a big draw. People are worried about the cost of dental in particular. And virtually all Medicare Advantage plans are offering some dental, some vision, and some hearing. They are also offering other benefits that people find super appealing, like debit cards to get over-the-counter medications.
Even so, the average Medicare beneficiary choosing among Medicare Advantage plans has a choice of 43 different plans in their area. Comparing those plans can be super confusing because they differ in all sorts of ways. They differ in benefits. They differ in extra benefits. They differ in provider networks. They differ in the drugs on the formulary.
One growing concern about Medicare Advantage is that some of these plans have relatively narrow networks.
With traditional Medicare, you can see virtually any doctor, any hospital, get help from any home health agency in the country. If they're taking new patients, they’re likely to take Medicare patients. With a Medicare Advantage plan, enrollees are more likely to be operating within a network.
It works like traditional insurance.
Which means if you are in a PPO, for example, you will pay more if you go out of network. If you are in an HMO, you might pay 100% if you go out of network.
It's an important issue for older people who travel, particularly if they're going to be in another location for an extended period of time. Networks are a way that insurers can control costs to some extent. It also can be an issue for people who are sick. Years ago, we looked to the extent to which Medicare Advantage plans had cancer hospitals and academic medical centers in their network, and they varied all over the place.
Often people make these decisions about health insurance coverage when they're relatively healthy. It's only when something unexpected happens medically that they may learn the hospital they want to go to or a specialist is out-of-network.
I want to go back on another reason why people are drawn to Medicare Advantage. It's one-stop shopping. They're not paying an additional premium — Medicare Part D — for their drug coverage, or for these extra benefits. And that is a meaningful benefit to people living on fixed incomes.
Let's say I sign up for Medicare Advantage at 65. But then, the network changes time. What happens then?
It’s really important for enrollees to review the network each year, and that's really hard to do. The burden is somewhat on the individual to be sure that the doctors and hospitals that they thought were in-network actually are from one year to the next.
Comparing networks across plans is almost an impossible task. There is a provision that says if there's a significant change during the middle of the year people will have the opportunity to disenroll and get another plan.
Can that happen, that in the middle of the year, they'll change aspects of the network?
Neuman: It can happen, and it has happened.
Another issue with Medicare Advantage that's been getting a lot of national attention recently is the use of prior authorizations. On the surface, prior authorizations aren't necessarily bad. They can control health care costs, and prevent unnecessary testing and procedures. But there is concern about the extent to which Medicare Advantage plans use this tool. What's your take?
Well, we certainly know that they are using this tool extensively. Most requests are not denied. But the issue here is it creates hassle and administrative burden on providers. It could have a significant delay in medical care, or deter people from getting the care that their doctors think they should get. That's why it's gotten so much scrutiny.
Increasingly, doctors and hospitals are starting to speak up about this because it is a huge burden on them. Now that Medicare Advantage accounts for more than half the Medicare population, more and more of their patients are being hit with prior authorization requests, which takes time from doctors’ offices and hospitals, and it does influence the care that people get.
Can you give an example?
Hospitals talk about difficulty getting people discharged to nursing homes, to skilled nursing facilities. So they could have a patient come in and the patient needs post-acute care. But the insurance company puts up a barrier and says, “No, well, we're not sure this person needs post-acute care, they might be able to go straight home.” And so there's a prior authorization flag for that kind of service.
[The Centers for Medicare & Medicaid Services] has actually put in place some rules this year to establish some criteria that the plans have to abide by in terms of imposing prior authorization rules on doctors — for example, what kind of evidence they require. And if traditional Medicare covers something, they need to cover it as well.
One of the issues for consumers is there's almost no way to compare plans in terms of which companies are more likely to do prior authorization for specialty drugs or chemotherapy, or for home health care. That would be helpful when you're thinking about which plan to choose.
So when considering whether to do Medicare Advantage or traditional Medicare, it's important to think about what your health care needs will be in the future, because 65 and 95 are different.
Not everybody can afford a Medigap policy. So even people who are thinking, “Oh, I would really like the flexibility to go to choose my doctor and go anywhere, if I get sick,” some people can't afford Medigap and feel like that's too financially risky.
But there are other people who are going, “I'm healthy, I'm going to choose a Medicare Advantage plan,” and they're really not thinking about what they will need as they grow older.
Unfortunately people really don’t compare plans from one year to the next,
A lot of people just stick with the plan that they chose at age 65, and don't review their options every year. They may end up in a plan that seemed fine when they first signed up. But it has changed a great deal over the course of the years and they only know it now because they're sick and they're using services.
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