The Medicare Advantage program is the object of passionate scrutiny and political debate given that its reimbursement rate for healthcare exceeds the rate used for original Medicare and, thus, produces higher healthcare delivery costs. A proposal to gradually reduce Medicare Advantage reimbursement to bring it in line with original Medicare reimbursement rates has met with criticism from one end of the political spectrum while the Medicare Advantage program as a whole has met with criticism from the other end of the political spectrum. Since one of the justifications of Medicare Advantage’s higher reimbursement rate is the provision of additional medical benefits not covered by original Medicare, HealthPocket investigated the degree to which Medicare Advantage plans across the U.S. provide medical benefits beyond original Medicare.
A discussion of additional health insurance coverage offered by Medicare Advantage plans requires a brief explanation of how Medicare Advantage plans are paid by the Medicare program. Each year Medicare Advantage plans place bids based on estimated enrollee costs for Medicare Part A and Part B services and accepted bids are compared to the benchmarks in their county or region.1 Plans that bid higher than their benchmark are paid the benchmark amount and the plan’s enrollees pay the difference between the bid and the benchmark in premiums, while plans that bid lower than their benchmark are paid the bid plus a rebate that is equal to 75% of the difference between the benchmark and the bid.2 The rebate is required to go to enrollees through extra benefits such as reduced premiums for part B and part D, reduced cost sharing, or coverage of services not included in original Medicare.
While original Medicare has a very broad range of healthcare benefits, there are a variety of services that are not covered. For example, original Medicare does not cover routine eye exams except for enrollees with special medical conditions such as glaucoma.3 Moreover original Medicare does not cover routine hearing exams or hearing aids.4 As for dental services, most are not covered by original Medicare, but Part A pays for some dental services performed within the context of a hospitalization.5
Given that vision, dental, and hearing benefits are not included in original Medicare but may be listed within Medicare Advantage plan descriptions, HealthPocket analyzed 2013 and 2014 Medicare Advantage plan records to determine what percentage of plans in each year offered these benefits.6 The analysis included four types of Medicare Advantage plans: health maintenance organization (HMO) plans, preferred provider organization (PPO) plans, Special Needs Plans (SNP), and private fee-for-service (PFFS) plans.7
HealthPocket found that insurance benefits beyond the coverage of original Medicare were present in almost all 2014 Medicare Advantage plans, with 97% of plans offering at least one vision, dental, or hearing benefit. Vision benefits were the most common among the three added benefits, offered in 94% of Medicare Advantage plans. The percentage of plans that offered vision benefits ranged from 91% in special needs plans to 98% in PFFS plans.
Percentage of 2014 Medicare Advantage (MA) plans that offer vision, dental, or hearing benefits
Among the research results, HealthPocket also found:
From 2013 to 2014, benchmark payments from the Centers for Medicare & Medicaid Services to Medicare Advantage plans were reduced by a total of 4%.8 When comparing 2013 Medicare Advantage plans to 2014 Medicare Advantage plans, HealthPocket found that the percentage of plans that offered all three additional benefits decreased from 47% in 2013 to 42% in 2014. However the percentage of Medicare Advantage plans that offered at least one vision, dental, or hearing benefit not included in original Medicare did not change between 2013 and 2014.
Percentage of 2013 Medicare Advantage (MA) plans that offer vision, dental, or hearing benefits
Among only Medicare Advantage plans with drug benefits, the percentage of plans that offered at least one vision, dental, or hearing benefit not included in original Medicare was 97% in 2013 and 96% in 2014. However the percentage of Medicare Advantage plans with drug benefits that had all three added benefits decreased from 49% in 2013 to 43% in 2014. It is also worthwhile to note that during the same period, the percentage of enrollees with access to zero premium Medicare Advantage plans with drug benefits decreased from 98% in 20139 to 84% in 2014.10
The results of HealthPocket’s analysis will likely be recycled in the debate on Medicare Advantage reimbursement rates. HealthPocket itself is non-partisan and does not take a political position on the topic. With respect to consumer interests, HealthPocket notes that coverage and cost-sharing associated with supplemental benefits varies among Medicare Advantage plans so Medicare beneficiaries interested in those benefits should closely examine the summary of plan benefits before enrolling in a Medicare Advantage plan. Additionally, since coverage for vision, dental, and hearing benefits is restricted to a provider network in most Medicare Advantage plans, consumers intending to select a plan with added benefits should make sure that any preferred dentists or other specialists are covered in the plan’s network.
The presence of benefits beyond original Medicare does not end the conversation about Medicare Advantage’s reimbursement rates. Additional questions may be asked about the utilization levels for those benefits as well as their value versus costs. We do know that among adults aged 65 and over, the percentages with vision or hearing problems are 14% and 8% respectively. Dental benefits may have broader appeal since 61% of people aged 65 and over made at least one dental visit in 2011, up from 55% in 1997.11
All plans investigated in this study belong to the Medicare Advantage market. The analysis was based on documents for HMO, PPO, special needs, and PFFS plans in HealthPocket’s database of 2013 and 2014 Medicare plan details. The plan details in HealthPocket’s database were acquired from medicare.gov. The documents that were analyzed included Medicare Advantage plans with drug benefits as well as Medicare Advantage plans without drug benefits. Prescription Drug Plans, Medicare Cost Plans, Medical Savings Accounts, and plans without details were not included in the analysis.
The analysis assumes the accuracy of the underlying data. Every effort was made to obtain details for all Medicare Advantage plans, but HealthPocket makes no representation that every Medicare Advantage plan was included in this study. Percentages are rounded using standard industry practices.
This analysis was written by Jesse Geneson, data researcher at HealthPocket, and Kev Coleman, Head of Research & Data at HealthPocket. Correspondence regarding this study can be directed to Mr. Geneson at email@example.com.
1 Medicare Advantage Fact Sheet. (November 25, 2013) http://kff.org/medicare/fact-sheet/medicare-advantage-fact-sheet/
2 Actuarial Bid Training: Introduction to Bidding. (April 2010) CMS Office of the Actuary. http://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/downloads/Bidder_Training_Slides_Intro.pdf
3 Medicare Part B covers annual eye exams for those beneficiaries with diabetes, glaucoma tests for beneficiaries at high risk for glaucoma, and diagnostic tests for beneficiaries with age-related macular degeneration. See eye exam information in “Your Medicare Coverage.” http://www.medicare.gov/coverage/eye-exams.html
4 Medicare does cover hearing and balance tests if ordered by a health care provider to check if a beneficiary requires treatment. See hearing and balance exams & hearing aids information in “Your Medicare Coverage.” http://www.medicare.gov/coverage/hearing-and-balance-exam-and-hearing-aids.html
5 Your Medicare Coverage: Dental services. http://www.medicare.gov/coverage/dental-services.html
6 48% of the 2014 Medicare Advantage records were HMO plans, 24% were PPO plans, 22% were special needs plans, and 6% were PFFS plans. Among the 2013 Medicare Advantage plan records, 46% were HMO plans, 22% were PPO plans, 24% were special needs plans, and 7% were PFFS plans.
7 Percentages for HMO and PPO plans did not include special needs plans.
8 Glenn Giese, Kelly Backes. 2015 Advance Notice: Changes to Medicare Advantage Payment Methodology and the Potential Effect on Medicare Advantage Organizations and Beneficiaries. (February 27, 2014) Oliver Wyman. http://ahip.org/2015-Advance-Notice/
9 Marsha Gold, Gretchen Jacobson, Anthony Damico, Tricia Neuman. Medicare Advantage 2013 Spotlight: Enrollment Market Update. (June 2013) Kaiser Family Foundation. http://kaiserfamilyfoundation.files.wordpress.com/2013/06/8448.pdf
10 Marsha Gold, Gretchen Jacobson, Anthony Damico, Tricia Neuman. Medicare Advantage 2014 Spotlight: Plan Availability and Premiums. (December 2013) Kaiser Family Foundation. http://kaiserfamilyfoundation.files.wordpress.com/2013/11/8520-medicare-advantage-2014-spotlight2.pdf
11 Health, United States, 2012. Tables 49 and 90. http://www.cdc.gov/nchs/data/hus/hus12.pdf#045
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