How does U.S. healthcare reform change Medicare Advantage plans?

Nearly 25 percent of all seniors receive Medicare benefits through Medicare Advantage Plans (Medicare Part C), which are health plans similar to HMOs or PPOs that are run by Medicare-approved private insurance companies. Medicare Advantage plans provide the same services covered by Medicare Parts A and B, just like original Medicare, but they typically offer additional coverage for services such as vision, dental, hearing, health and wellness, and many include prescription drug coverage (Medicare Part D).
The Affordable Care Act has made the following changes to these plans with the goal of lowering costs and providing better benefits and higher quality care:
  • Phasing out of extra payments to Medicare Advantage plans. Medicare pays over $1,000 more on average per person to Medicare Advantage plans than it spends per person for Medicare, which in turns hikes up the cost of everyone’s premiums, including the 77 percent of seniors enrolled in original Medicare. Beginning in 2011 the Act provides for payments from Medicare to Medicare Advantage to be phased out over the next several years until 2018. It is a plan that is projected to save Medicare more than $150 billion over 10 years. Advantage plans that provide high-quality care and services will receive bonus payments.
  • Plans may eliminate optional services. To reduce costs, Medicare Advantage plans may choose to reduce optional services, for example benefits toward purchasing glasses or joining a gym, but they may not eliminate any items or services covered by traditional Medicare.
  • Medicare Advantage Plans must still cover all items and services offered by traditional Medicare. Medicare Advantage plans will continue to offer the same benefits of Parts A and B of Medicare and offer other benefits. By 2014 the plans will be required to lower their costs and spend at least 85 percent of every dollar on health care rather than administrative costs or profits.

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Important: This content reflects information from various individuals and organizations and may offer alternative or opposing points of view. It should not be used for medical advice, diagnosis or treatment. As always, you should consult with your healthcare provider about your specific health needs.