S E C T I O N

Medicare Advantage

Chart 10-1. MA plans availabl to virtually all Medicar M le re beneficiar ries

CC CPs HMO or local PPO 2005 2006 2007 2008 2009 2010
Note:

Reg gional PPO N/A N 87 87 87 91 86

Any CCP 67% 98 99 99 99 99

PFFS 45% 80 100 100 100 100

Any MA plan 84% 100 100 100 100 100

Average plan e offerings per coun nty 5 12 2 20 0 35 5 34 4 21 1

67% 80 82 85 88 91

MA (Medicare Adv vantage), CCP (c coordinated care plan), HMO (he e ealth maintenance organization), PPO (preferred rovider organizat tion), PFFS (priva fee-for-servic N/A (not app ate ce), plicable). These d data do not include plans that hav ve pr re estricted enrollme or are not pai based on the M plan bidding process (special needs plans, co ent id MA ost-based plans, em mployer-only plans, and certain d demonstration pla ans). ata MedPAC analysis of plan finder da from CMS.

Source:

There are four types of plans three of wh e s, hich are CCPs. Local CC include local PPOs and CPs e s HMO which hav comprehe Os, ve ensive provi ider network and limit o discourage use of out ks or t-ofnetwo providers. Local CCPs may choose which in ork ndividual cou unties to ser rve. Regiona al CCPs (regional plans are req s p quired by sta atute to be P PPOs) cover entire state-based regio ons and h have networks that may be looser th the ones required of local PPOs Regional han s f s. PPOs were available beginning in 2006. PFFS plans which are not CCPs, a not required s s, are to have networks and membe may go t any willing Medicare provider. s ers to g Local CCPs are available to 91 percent o Medicare beneficiaries in 2010u from 67 a of up perce in 2005. Regional PP ent POs are ava ailable to 86 percent of b beneficiaries. Virtually all l beneficiaries live in a county where MA P PFFS plans are available in 2010u from 45 up perce in 2005. For the past five years, 100 percent of Medicare beneficiari have had MA ent t t e ies d plans available, up from 84 p s u percent in 20 005. number of pl lans from wh hich beneficiaries may c choose in 20 is about the same as in 010 s The n 2007. In 2010, be eneficiaries c choose from an ave can erage of 21 p plans operat ting in their count ties. This nu umber is a de ecrease from 2008 and 2009, reflec m cting CMSs 2010 effort t to reduc the numb of duplica ce ber ative plans a plans with small enrollment. and

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Chart 10-2. Access to zero-pr A o remium p plans wit MA dr th rug co overage, 20062010
100 90 80 Percent of beneficiaries 70 60 50 40 30 20 11 10 0 HMO
Note: Source:

2006

2007

200 08

2009

2010

94 86 72 73 7 88 85 8

66 60

70 0

68 55

48 34 29 19 28 25

52

26 15

25 25

29

32

PPO P

PFFS

Regio onal PPO

Any MA plan n

vantage), HMO (health maintenance organization PPO (preferre provider organ n), ed nization), PFFS ( (private MA (Medicare Adv ee-for-service). fe finder data from CMS. MedPAC analysis of bid and plan f

Acros most plan types, the a ss n availability o zero-prem of mium plans plans with no premium h m paym ments other than the Med t dicare Part B premium declined in 2010. Fewe beneficiar er ries can o obtain an MA APrescriptio Drug plan (MAPD p on n plan), an MA plan that includes Part D A drug coverage, fo which the enrollee pays no premium for eithe the drug co or er overage or t the cover rage of Medicare Part A and Part B services. In 2010, 85 pe ercent of Me edicare beneficiaries hav access to at least one MAPD pla with no premium (bey ve e an yond the Medic care Part B premium) fo the combin coverag (and no p or ned ge premium for a nonany Medic care-covered benefits in ncluded in th benefit pa he ackage), com mpared with 94 percent i in 2009. Sixty-eight percent of benefic ciaries have zero-premiu MAPD HMOs availa um able, while M MA are much le widely av PD P PPOs without premiums ess vailable. How wever, zero-premium regional PPOs ar more available than th have be in the pa PFFS pla offering zero re hey een ast. ans miums were available to 7 percent o beneficiari in 2009, but to only 2 percent o a 72 of ies 26 of prem beneficiaries in 2010. 2 ost M ollees continu paying th Medicare Part B premium, but some ue heir e In mo cases, MA plan enro MAP plans use rebate dol PD llars to reduc or elimina their enrollees Part B premium ce ate obliga ation.

158

Me edicare Advant tage

Chart 10-3. Enrollmen in MA plans, 1994201 t nt 10

12 10.5 10 Beneficiaries (in millions) 1 8.1 8 6.1 6 4.1 4 4 2.3 2 3.1 5.2 6.4 6.9 6.3 5.5 4.9 4.6 4.7 4.9 4 9.4 11.0

0 1994 1995 19 1997 199 1999 2000 2001 2002 2 996 98 0 2003 2004 20 2006 200 2008 2009 2010 005 07
Note: Source: MA (Medicare Adv vantage). ed (MMCC) reports and monthly sum mmary reports, C CMS. Medicare manage care contract (

Medic care enrollm ment in privat health pla paid on a at-risk ca te ans an apitated basi is at an all is ltime high at 11.0 million enro ollees (24 pe ercent of all M Medicare be eneficiaries). Enrollment rose rapidly throughou the 1990s peaking at 6.4 million e ut s, t enrollees in 1999, and th declined to hen d a low of 4.6 millio enrollees in 2003. MA enrollment has increas steadily since 2003. w on A t sed .

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159

Chart 10-4. Changes in enroll C lment va amon major plan typ ary ng pes
Total enrollees housands) (in th Plan type Local CCP Ps Regional PPOs PFFS
Note: Source:

February 2007 2 6,065 121 1,328

February 2008 6,830 257 2,057

Februa ary 2009 9 7,625 5 377 7 2,353 3

Fe ebruary 2010 2 8,354 760 1,657

Percentage ch P hange 20092010 10% 102 30

CC (coordinated care plan), PPO (preferred provider organization PFFS (private fee-for-service). Local CCPs inc CP O n), e clude he ealth maintenanc organizations and local PPOs. ce . m y CMS health plan monthly summary reports.

llment in local CCPs gre slower than enrollment in regiona PPOs ove the past ye ew al er ear, Enrol while enrollment in PFFS pla declined. Combined enrollment i the three types of plan e ans in ns grew by 4 percen from February 2009 to February 2 nt o 2010. While still the dom e minant form of enrollment, local CCP enrollmen grew 10 pe nt ercent over t the past y year, while enrollment in regional PP e n POs grew by 102 percent from a mu lower ba y uch ase. It is li ikely that mu of the en uch nrollment gro owth in regio onal PPOs c came from th 30 percen he nt declin in PFFS enrollment o ne e over the sam time perio me od.

160

Me edicare Advant tage

Chart 10-5. MA and cost plan enrollm M ment by s state and type of d plan, 2010 0
State Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware olumbia District of Co Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland etts Massachuse Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada shire New Hamps New Jersey o New Mexico New York North Carolina ta North Dakot Ohio Oklahoma Oregon ia Pennsylvani Puerto Rico Rhode Island South Carolina ta South Dakot Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming U.S. Total
Note: Source:

Medicare eligibles M s (in thousands) 829 63 891 522 4,267 604 559 145 77 3,270 1,201 201 222 1,812 987 513 427 745 674 260 766 1,408 1,620 771 489 988 165 276 343 212 1,308 305 2,941 1,450 108 1,873 594 603 2,253 632 181 749 135 1,032 2,907 274 108 1,109 940 378 895 78 46,172

Distribution (in percent) of e enrollees by plan type HMO 12% 0 32 4 36 24 15 1 2 23 3 13 11 5 1 3 3 4 19 5 3 10 7 14 3 12 0 4 27 0 10 18 23 8 0 14 10 22 25 59 29 1 0 17 13 12 0 1 17 1 11 0 16 Local PPO 7% 0 2 1 0 2 1 1 1 1 2 7 6 2 4 2 4 3 0 1 1 1 2 1 1 4 3 1 1 0 0 4 4 1 0 7 2 16 9 8 1 1 1 2 1 13 0 2 3 4 5 0 3 Regional PPO 0% 0 1 2 1 0 1 0 0 5 3 2 0 1 4 1 1 3 1 0 0 0 1 2 1 1 0 1 1 0 0 0 1 0 0 8 0 0 0 0 4 3 1 1 2 0 1 0 0 9 2 0 2 PFFS 2% 0 2 7 1 4 1 2 0 1 12 1 12 2 5 6 3 5 4 6 1 2 5 7 4 4 15 6 2 6 2 3 2 8 6 3 3 4 3 0 0 9 5 5 2 7 3 9 5 4 8 5 4 Cost 0% 0 0 0 0 4 0 0 6 0 0 18 1 0 0 1 1 1 0 0 3 0 0 17 0 0 0 1 0 0 0 0 0 0 2 1 0 0 0 0 0 0 0 0 1 1 0 1 0 3 2 1 1 To otal 21 2 % 1 37 3 14 1 39 3 34 3 18 1 4 10 1 30 3 20 2 41 4 29 2 10 1 16 1 13 1 11 1 16 1 24 2 12 1 8 14 1 15 1 41 4 9 21 2 18 1 12 1 31 3 7 12 1 25 2 30 3 18 1 8 33 3 15 1 42 4 38 3 67 6 35 3 15 1 8 24 2 19 1 33 3 4 14 1 25 2 22 2 29 2 7 25 2

MA (Medicare Adva A antage), HMO (he ealth maintenance organization), PP (preferred provider organization PFFS (private f e PO n), fee-forse ervice). Cost plans are not MA plans; they submit cos reports to CMS rather than bids. Totals may not su due to roundin s st S um ng. CM enrollment an population data 2010. MS nd a,

Medica private plans attract more bene are a eficiaries in some areas than in others. At the state level, private pla attract only 1 e e ans percent of beneficiaries in Alaska. The hi t ighest penetrations of Medicare private plans are in Oregon and Pu uerto Rico, with 4 42 percent and 67 percent of beneficiaries, respectively, enro t olled in plans. The popularity of different types of plans varies as well. For example, some states have alm most their entire p plan enrollment in PFFS n while other states have little or non of their enrollm s ne ment in PFFS pla ans. plans, w

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161

Chart 10-6. MA plan b M benchma arks, bids, and M Medicare program m payments relative to FFS spending, 2010 s e
All Plan ns Benchmarks/FFS Bids/FFS Payments s/FFS
Note:

HMO Os 112% % 97 108

Loca PPOs al 115% 108 113

Regional PP POs 109% % 104 108

PFF FS 114 4% 111 113

112% 100 109

MA (Medicare Adv vantage), FFS (fe ee-for-service), H HMO (health mai intenance organi ization), PPO (pr referred provider r rganization), PFF (private fee-fo FS or-service). Table assumes that p e physician rates are not reduced b the sustainable by or gr rowth rate formul between publication date and t end of 2010. la the ember 2009. MedPAC analysis of plan bid data from CMS, Nove

Source:

Since 2006, plan bids have pa e artially determ mined the Me edicare paym ments they receive. Plans bid to offe Part A and Part B cove er d erage to Med dicare beneficiaries (Part D coverage is handled separ rately). The bid includes p b plan administrative cost a profit. CM bases the Medicare and MS e paym ment for a priv vate plan on the relationship between its bid and it applicable benchmark. ts The b benchmark is an administ s tratively dete ermined biddi target. Le ing egislation in 1 1997 establis shed bench hmarks in ea county, w ach which include a floora minimum am ed mount below which no cou unty bench hmarks could go. By desi d ign, the floor rate exceeded fee-for-se ervice (FFS) spending in many count ties. Benchm marks are upd dated yearly by the nation growth in FFS spendin nal ng. If a pl lans bid is above the ben nchmark, the the plan re en eceives the b benchmark as payment fro s om Medic care and enr rollees have t pay an add to ditional prem mium that equ uals the difference. If a plans bid is below the benchmark, th plan receives its bid, p he plus a rebate defined by law as 75 e, y ent een s urn perce of the difference betwe the plans bid and its benchmark. The plan must then retu the re ebate to its enrollees in th form of supplemental b he benefits, lowe cost sharin or lower er ng, premiums. arks average 112 percen of FFS spe e nt ending when weighted by MA We estimate that MA benchma lment. The ra varies by plan type, b atio y because diffe erent types of plans tend t draw f to enroll enroll lment from different types of areas. s Plans enrollments -weighted bid average 100 percent o FFS spend ds of ding. We esti imate that HM MOs bid an average of 97 percent o FFS spend n of ding, while bi from othe plan types average at least ids er 104 p percent of FF spending. These numb FS bers suggest that HMOs can provide t same t the servic for less than FFS, wh other plan types tend to charge more. ces hile n We project that 20 MA paym 010 ments will be 109 percent of FFS spen t nding. It is lik kely this num mber will de ecline signific cantly over th next few y he years as ben nchmarks are gradually re e educed relativ to ve FFS l levels to mee requiremen under the Patient Pro et nts e otection and A Affordable Ca Act of 20 are 010. The r ratio of payments relative to FFS spen nding varies b the type o MA plan. H by of HMOs and region PPO pay nal yments are es stimated to b 108 percent of FFS, while payment to PFFS and be ts local PPOs will av verage 113 p percent.

162

Me edicare Advant tage

Chart 10-7. Enrollmen in emp nt ployer gr roup MA plans, 2 A 2006201 10

2.0 1.8 1.6 Enrollment (in millions) 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0 May-06 6
Note: Source:

PFFS CCP

Nov-07

Feb-08 8

Feb-09 F

Feb-10

vantage), PFFS ( (private fee-for-s service), CCP (co oordinated care p plan). MA (Medicare Adv CMS enrollment data.

While most MA plans are ava e p ailable to any Medicare beneficiary r residing in a given area, , some MA plans are available only to retir e a e rees whose Medicare co overage is supplemented by their former empl loyer or unio These plans are calle employer group plans. Such plan on. ed r ns are usually offere through in ed nsurers and are markete to groups formed by e ed s employers o or union rather tha to individu beneficia ns an ual aries. e ears, enrollm ment in employer group p plans has do oubled, while overall MA e A In the last four ye enrollment grew by about 55 percent. As of February 2010, abou 1.9 million enrollees w s y ut n were in em mployer group plans, or a about 18 per rcent of all M enrollees MA s. Our a analysis of MA bid data s M shows that e employer gro plans on average ha bids tha are oup n ave at highe relative to fee-for-serv er vice (FFS) sp pending than individual plans, mean n ning that group plans appear less efficient than individua market MA plans. Emp s s al A ployer group plans bid a p an avera of 107 percent of FF compare with 99 pe age p FS, ed ercent of FFS for individual plans.

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163

Chart 10-8. Number o specia needs plans pe N of al eaked in 2008

900 800 Number of special needs programs 700 600 500 400 300 200 100 11 0 2004
Source:

769 698 8 562 2 476

276

125

2005

2006

2007

2008 8

2009 9

2010

CMS special need plans fact sheet and data summary, February 14, 2006, and CM special need plans ds MS ds omprehensive reports, March 21, 2007, April 2008 April 2009, and April 2010. 8, co

The C Congress created specia needs pla (SNPs) a a new Me al ans as edicare Adva antage (MA) plan type in the 2003 Medicare Pr rescription D Drug, Improv vement, and Modernization Act to provid a commo framewor for the existing plans s de on rk serving spec needs be cial eneficiaries and to expand beneficiaries acce to and ch ess hoice among MA plans. g In 2010, there are 562 SNPs As is the c e s. case with all MA plans, th is a decr his rease from 2 2008 and 2 2009 as CMS made an e S effort in 2010 to reduce the number of duplicativ plans and 0 ve d plans with small enrollment. s e SNPs were origin s nally authoriz for five y zed years. SNP authority wa extended, subject to n as new requirements, by the Medicare, Medicaid and SCHIP Extension Act of 2007 the Medica y d, n 7, are Impro ovements for Patients an Providers Act of 2008 and the P nd s 8, Patient Protection and Afford dable Care Act of 2010. Absent add A ditional congressional ac ction, SNP authority will expire at the end of 2014. e

164

Me edicare Advant tage

Chart 10-9. The numb of SN ber NPs decr reased w while SNP P nrollmen was fla from 2 nt at 2009 to 2 2010 en
SNP enrollment (in thousands) 800 700 Number of SNPs 600 500 400 300 200 100 0 April 2009 Dual eligible e Institutional l Chronic or disabling condition d April 2010 A 406 335 209 83 153 74 1,400 1,200 1,000 800 600 400 200 0 April 200 09 Dual eligible Institutional ition Chronic or disabling condi Apr 2010 ril 918 969 9 265 119 214 2 98

Note: Source:

NP ds SN (special need plan). ds hensive reports, April 2009 and 2 2010. CMS special need plans compreh

Altho ough the num mber of SNP plans decre P eased by 19 percent from April 2009 to April 2010, 9 m 9 the number of SN enrollees decreased by only 2 pe NP s ercent. NPs cent) are for dual-eligible beneficiaries, while 27 percent are for e 7 e In 2010, most SN (60 perc h nditions, and 13 percent are for ben d t neficiaries wh reside in ho beneficiaries with chronic con institu utions (or reside in the c community b have a similar level o need). but of Enrol llment in SN has grow from 0.8 million in Ma NPs wn arch 2007 (n shown) to 1.3 million in not o April 2010. The a availability of SNPs has changed slightly and va aries by type of special n e needs popula ation serve In 2010, 79 percent o beneficiar ed. of ries reside in areas wher SNPs ser dual-eligible n re rve beneficiaries (up from 76 per rcent in 2009 49 percent live where SNPs serv 9), e ve utionalized beneficiaries (down from 53 percent), and 63 pe b s m ercent live where SNPs institu serve beneficiarie with chronic condition (down fro 72 percen e es ns om nt).

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165

Web li inks. Me edicare A Advantag ge

Chap 7 of Med pter dPACs June 2009 Repo to the Co e ort ongress prov vides informa ation on Medi icare Advant tage plans. http:/ //www.medpac.gov/chap pters/Jun09_ _Ch07.pdf Chap 4 of Med pter dPACs Marc 2010 Rep to the C ch port Congress pro ovides inform mation on Medic care Advant tage plans. http:/ //www.medpac.gov/chap pters/Mar10_ _Ch04.pdf More information on the Med e n dicare Advan ntage progra payment system can be found in am n MedP PACs Medic care Paymen Basics se nt eries.
http:// /www.medpa ac.gov/docum ments/MedPA AC_Payment t_Basics_09_ _MA.pdf

CMS provides inf formation on Medicare A n Advantage a other Me and edicare managed care p plans. http:/ //www.cms.g gov/HealthPl lansGenInfo o/

The o official Medic care website provides in e nformation on plans avai ilable in specific areas a and the benefits they offer. http:/ //www.medic care.gov/

166

Me edicare Advant tage