Winners and losers in Medicare Advantage
Medicare beneficiaries in private health plans throughout the country get significantly different levels of extra benefits, and that disparity will continue with the implementation of the 2010 health law, according to an analysis released May 14 by the health care consultant Avalere Health. Moving forward, some extra benefits that seniors are getting in these plans are likely to diminish and some are likely to disappear altogether depending on where a senior lives, according to the report.
In Florida, for example, beneficiaries with private plans got an extra $154 a month worth of benefits in 2010, while those in Alaska got none.
One quarter of Medicare beneficiaries get their care through private Medicare Advantage health plans, which are mostly HMOs and PPOs. If a plan bids less in an area than a government benchmark for traditional Medicare, then it gets a rebate of 75 percent of the difference that it must pass along to seniors in extra benefits or lower cost-sharing. That can translate into lower prescription drug premiums, or it can provide benefits that traditional Medicare doesn’t cover, such as vision and hearing.
The data are from 2010, and the health law changes the way that Medicare pays for seniors and the disabled in Medicare Advantage plans moving forward. However, it is likely that Medicare Advantage enrollees in areas receiving the most generous rebates will continue to see some benefit, said Bonnie Washington, senior vice president of Avalere.
Already, as a result of the health law, the government is phasing in reduced payments to Medicare Advantage plans.
In addition, by 2014, the rebates will change so that they are partially based on quality measures, called STAR ratings. By 2014, those plans with 4.5 or 5 stars (out of a total of 5), will get a 70 percent rebate. Those with 3.5 or 4 stars will get 65 percent, and those scoring lower will get only 50 percent.
Starting in 2013, if a plan’s performance is below 3 stars for 3 consecutive years, it is booted out of the Medicare Advantage program altogether.
“This kind of shows areas where Medicare Advantage has the most room to buffer payment cuts going forward,” said Jennifer Rak, senior manager at Avalere. “It’s also an indication of where the payment cuts might be harder for plans to deal with.” Rural states are most vulnerable, she said.
Avalere compared the value of the extra benefits by state, although there can be variation within a state, as rates are actually set by county. The average nationally was $73 per month that must be passed along to each beneficiary, according to Avalere. Florida had the highest average rebate at $100 per beneficiary, while Alaska had an average of no rebate. States that exceeded the $73 average were California, Florida, Louisiana, Missouri, New Mexico, Nevada, New York, Texas, and Washington, D.C.
Some of the smallest rebates in 2010 were in Delaware, Michigan, Minnesota, Montana, New Hampshire, South Dakota and Wyoming — with Alaskans on average receiving no rebate.
This article was produced by Kaiser Health News with support from The SCAN Foundation. Kaiser Health News is an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communications organization not affiliated with Kaiser Permanente.