Medicare Advantage Marketplace Less Robust for Rural Residents
Fewer Plans, Higher Premiums Challenge People in Rural Settings
One of the accomplishments of the Medicare Advantage program has been its ability to satisfy its enrollee base and achieve a rapid growth rate in the process. Over 14.5 million people are in Medicare Advantage plans, representing over 28 percent of the Medicare population.1 In reviewing the 2014 Medicare Advantage plan market, HealthPocket found overall stability in terms of premiums and out-of-pocket maximum expenses compared to 2013.2 The research also shows a measurable improvement in quality scores for 2014 Medicare Advantage plans.3 However, the good news within the marketplace is tempered for rural residents where the market is less robust than in the rest of the country.
HealthPocket’s research on 2014 Medicare plans shows that even in an environment of reasonably stable trends, plans change from year to year. Flux has been more the pattern in rural markets, where the primary type of Medicare Advantage plan used to be Private Fee for Service, which typically had an open provider platform. Medicare required most Private Fee for Service insurance carriers to create provider networks in order to more closely coordinate enrollee care.4 The transition caused some plans to exit the rural market and spurred the transition of rural enrollees primarily into preferred provider plans and secondarily into health maintenance organizations.5
Rural Medicare Advantage market share of the total rural Medicare enrollee population is 17 percent,6 a growing population, but less than the national Medicare Advantage market share of 28 percent. HealthPocket’s research compared 2014 plan detail between rural and non-rural areas, and the data explain the reasons for the differential.
Average Number of Medicare Advantage Plans in Each County:
On average a rural county has 8 plan choices, 50 percent fewer than a resident of a non-rural county. A report published in HealthAffairs indicated that greater choice of Medicare Advantage plans causes higher enrollment until the choice exceeds 15 plans.7 The rural results are consistent with that finding.
Average Medicare Advantage Premium:
Average Medicare Advantage premiums for plans in rural counties are $68, which is a 28 percent increase over the average premium of $53 in non-rural counties.
Percent of Medicare Advantage Plans with Zero Premium:
38 percent of non-rural Medicare Advantage plans are available to enrollees with zero premium cost8 compared with the 26 percent of rural plans with zero premium cost. This is significant from a consumer’s perspective since 55 percent of Medicare Advantage enrollment is in zero premium plans.9
Percent of Medicare Advantage Plans with $3,400 or Less Maximum Out-of-Pocket Limit:
31 percent of non-rural plans have annual maximum out-of-pocket limits of $3,400 or less, which is higher than the 25 percent of rural plans with limits of $3,400 or less. Like those with zero premium, plans with low maximum out-of-pocket limits get higher enrollee participation, with nearly half of Medicare Advantage participants selecting low out-of-pocket limit plans.10
Implications for Consumers
Number of plans available, premium level and maximum out-of-pocket limit are some of the critical financial attributes that go into a consumer’s choice of a Medicare Advantage plan. In each of these categories, rural residents are disadvantaged relative to the selection choices that are enjoyed by non-rural residents. However, the data indicate that within the lesser array of choices, zero premium and low out-of-pocket maximum plans can be found in rural areas.
Rural residents are not in the same market as their non-rural counterparts, so at the point of sale they are not aware of better options in other locations. Instead they will focus on whether the Medicare Advantage choices they have meet their needs better than traditional Medicare with a Supplement plan and Part D prescription drug plan. That is the real alternative they face, assuming they have a guaranteed issue window that makes a Medicare Supplement plan available.11 Medicare Advantage plans can remain competitive in rural markets based on this approach.
This study reviewed the financial aspects of Medicare Advantage plan selection. Other factors will play an important role in plan choice, especially whether an enrollee’s physicians are in a plan’s network, prescription drug coverage and the quality score the plan has earned from Medicare. Considering these elements along with the financial metrics consumers can make plan selections that meet their needs. Also, because rural Medicare Advantage plans have been subject to greater amounts of change than non-rural plans, rural residents should pay particular attention to reviewing available plans during the Annual Enrollment Period that ends on December 7.
Data for 2014 Medicare Advantage plan premiums, maximum out-of-pocket expenses and numbers available within each county was taken from the CMS 2014 landscape file.12 Data were organized by choices in each county in the United States. No adjustment was made for market share of each plan. Counties deemed rural were based on Rural Health Grants Eligibility Analyzer produced by the Health Resources and Services Administration of the US Department of HHS.13 Counties not designated as rural were designated as non-rural in this study.
All analysis assumes the accuracy of the underlying government data. While every effort was made towards a comprehensive collection of plans, HealthPocket makes no representation that every plan within the market or in an individual state was included in this study. Percentages are rounded according to standard industry practices.
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Steve Zaleznick, Executive Director for Consumer Strategy and Development, and Robert Fahlman, Member of Board of Advisors at HealthPocket.com co-authored this survey analysis.
Correspondence regarding this study can be directed to Mr. Zaleznick at email@example.com. Feedback and questions are welcome but, given the volume of email, personal responses may not be feasible.Google+
1 See: http://www.markfarrah.com/press-room/Medicare-Advantage-Enrollment-Tops-14.5-Million.aspx.
2 See: /healthcare-research/infostat/zero-premium-medicare-advantage-plans-available-in-2014#.UoGJ-ZFqeRI and /healthcare-research/infostat/2014-medicare-advantage-spending-caps-help-enrollees-manage-risk/#.UoGKFpFqeRI.
3 See: /healthcare-research/infostat/2014-medicare-advantage-star-ratings-improve#.UoGKW5FqeRI.
4 The issues resulting from the lack of coordination of care in Private Fee for Service Plans are described in this article: http://www.commonwealthfund.org/~/media/Files/Publications/Issue%20Brief/2008/Oct/Medicare%20Advantages%20Private%20Fee%20for%20Service%20Plans%20%20Paying%20for%20Coordinated%20Care%20Without%20the%20Coordinat/Biles_MedicareAdvantageprivatefeeforserviceplans_ib%20pdf.pdf.
5 The transition from PFFS is described in this article: http://www.public-health.uiowa.edu/rupri/publications/policypapers/NOV.MA%20Overview%20October%202011%20FINAL.pdf.
6 See: http://www.public-health.uiowa.edu/rupri/publications/policybriefs/2013/2012%20MA%20update.pdf.
7 See: http://healthaffairs.org/blog/2011/08/19/too-many-medicare-advantage-choices-can-decrease-enrollment/.
8 The enrollee is still responsible for the Part B premium.
9 See: http://kaiserfamilyfoundation.files.wordpress.com/2013/06/8448.pdf.
10 See report linked in footnote 9.
11 Guaranteed within six months of becoming eligible for Medicare. Other enrollment windows may be available, plus a policy may be offered to people passing a health screen.