COLUMN: Diving into the pros and cons of Medicare Advantage

The headline on the front of a respected retirement newsletter didn’t pull any punches: “The Disadvantages of Medicare Advantage.” The subhead kept up the drumbeat: “Problems include costs to taxpayers, service denials and slow care approvals.”

The Kiplinger Retirement Report’s reference, of course, was to Medicare Advantage insurance, in which a slight majority of the nation’s Medicare beneficiaries are now enrolled.

Although the report opened with a distressing story about a 92-year-old beneficiary whose Medicare Advantage plan refused to pay for post-hospitalization care in a rehabilitation facility, and delivered multiple negatives about the plans, it also shared some positives. Among them:

• “Most enrollees are satisfied with their plans…. J.D. Power says customer satisfaction with Medicare Advantage plans is significantly higher than with other commercial health plans.”
• “To be sure, Medicare Advantage is a lot easier to understand than traditional Medicare, with its various parts A, B and D, and … it offers individual beneficiaries significant savings – as much as $2,500 a year, according to AHIP,” the industry trade organization.
• Medicare Advantage plans offer “lower costs for individuals, simpler selections and extras such as dental and vision coverage and even gym memberships, not provided by traditional Medicare.”
• “Medicare Advantage plans cap beneficiaries’ out-of-pocket costs, something traditional Medicare does not do, leaving its enrollees facing astronomical costs unless they are enrolled in a Medigap plan for an additional monthly premium.”

Given short shrift, perhaps because the newsletter has well-heeled subscribers, is the comparative premium prices of insurance beyond original Medicare (that is, Medicare only).

Nearly a dozen Medicare Advantage insurance plans are available to Marion and Polk county Medicare beneficiaries at no cost. By contrast, a 65-year-old Medicare beneficiary could expect to pay a monthly premium in excess of $150 for a Medicare supplement (Medigap) policy, and then add a prescription drug plan to that.

OK, the above bulleted points describe the report’s good news about Medicare Advantage plans. As the headline promised, the report devotes more column inches to the negatives. Examples:

• “The U.S. Senate Permanent Subcommittee on Investigations, using data from the three largest MA insurers, found they ‘are intentionally using prior authorization to boost profits by targeting costly yet critical stays in post-acute care facilities.’ ” In other words, the companies denied certain pre-approvals. (The report names United Healthcare, Humana and CVS-Aetna as three companies accounting for 58% of Medicare Advantage enrollees.) The report also cites some Medicare Advantage plans’ inaccurate “up-coding” of medical treatments to increase their Medicare reimbursements.
• “Even when care is approved, the time-consuming pre-approval harms patients, advocates say.” It quotes one as saying the pre-approval process may delay care by two days or more.
• Medicare Advantage plans have “limited provider networks that can change, sometimes leaving beneficiaries unable to keep their doctors.”
• “Higher costs for taxpayers. By one estimate, taxpayers pay 22% more per Medicare Advantage enrollee over the cost of traditional Medicare.” (This seems a disadvantage to the taxpayer, which Congress could review, rather than to the insured.)

The most alarming Medicare Advantage negative may be the need to seek pre-approvals for certain medical services and treatments, and the fear that the insurance company may issue a denial.

In reviewing 2022 Medicare Advantage pre-approval requests, KFF (formerly Kaiser Family Foundation) found that plans either fully or partially denied 7.4% of such requests.

KFF further found that just 9.9% of denials were appealed – but that 83.3% of appeals resulted in the denial being reversed. It’s possible, of course, that the reversal rate was so high because the challenged denials were so clearly wrong.

All of this leaves most Medicare beneficiaries with three avenues for pursuing health care coverage:

• Be enrolled only in Medicare Parts A and B without a Medigap policy or instead of an Medicare Advantage plan. This eliminates the need for pre-approvals (but be sure Medicare covers your medical treatment or service) and eliminates the need for a referral to see a specialist. As the newsletter points out, though, having Medicare only would leave the beneficiary subject to unlimited costs if highly expensive medical treatments were required; charges for many medical treatments and services will be higher than with either Medicare Advantage or Medigap insurance. With original Medicare, one would also need a separate prescription drug plan.
• Enroll in a Medigap (Medicare supplement) insurance policy, where with the most robust one (Plan G) Medicare and the policy pay all Medicare-covered medical costs after the Medicare Part B deductible ($257 this year). This also delivers the advantages of no pre-approvals and no referrals to see a specialist. One would need a separate prescription drug plan, too.
• Enroll in a Medicare Advantage plan that includes prescription drug coverage, and also be a good advocate for yourself. Monthly premiums in Marion and Polk counties range from no premium to $192, and the insured will have co-pays for most medical services. In selecting a plan it’s worth paying attention to Medicare Advantage insurance plans’ star ratings shown on the Medicare.gov website, where consumer satisfaction with the plans contributes to the rating.

Jim Sellers of Salem is a certified Medicare counselor with the Senior Health Insurance Benefits Assistance (SHIBA) program. To ask a question to be answered in this column, e-mail [email protected]. To schedule a free SHIBA phone, Zoom or in-person appointment with a volunteer Medicare counselor, please call 800-722-4134.

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