When working adults turn 65, they have a lot of options about their health coverage. According to the Kaiser Family Foundation, currently about 25 percent of Medicare enrollees have opted for Medicare Part C, also known as the Medicare Advantage (MA) plan. Such plans have been growing at a tremendous rate; since 2004, the number of beneficiaries enrolled in private plans has more than doubled from 5.3 million to 13.1 million in 2012, as determined by the Foundation. However, the coverage varies, making it a challenge for seniors and their insurance agents to find the best plan for their needs.
See also: 13 Medicare facts you need to know
According to the Congressional Budget Office, MA plan participants will expand to 21 million by fiscal year 2023, from 14 million this year. For insurers, membership growth is a good sign. They should consider the following to get the most out of Medicare Advantage.
1. Potentially low operative costs for the senior care market
Although costs vary state to state, generally the MA program offers an affordable, simplified solution. This plan allows the elderly and disabled to receive their benefits through privatized health plans as an alternative to the traditional Medicare program. Senior citizens in good health may be more likely to purchase Medicare Advantage than other supplemental Medicare insurance options because the policies are more affordable on a monthly basis.
With traditional Medicare, Part A, the hospital provides coverage for inpatient care but the deductibles associated with this option vary from year to year. Part B is medical insurance which covers the doctor’s expenses and other medical services. Part C, Medicare Advantage, fills the financial gap left from Parts A and B, helping healthy elderly adults get all of their medical costs covered. Unfortunately, those with End-Stage Renal Disease do not have these options.
Savings on premium costs are a big driver of Advantage plan growth. Enrollees pay their regular Part B premium, which is $104.90 this year. The Advantage plans can also charge a supplemental premium, but many don't. This year, 55 percent of enrollees are in plans with no extra premium, and two-thirds of HMO Advantage plan members pay nothing extra, according to data compiled by the Kaiser Family Foundation.
Also, MA participants do not pay standalone premiums for prescription drug coverage, averaging $30 per month this year. The Patient Protection & Affordable Care Act (PPACA) gradually reduces reimbursement to MA plans, but also creates quality bonuses for the plans that provide the best services for their members. These bonus funds are used to maintain the extra benefits and care management programs that members rely upon.
What it means for health insurers
Earlier this year, the health insurance industry found themselves at odds with the Obama administration’s proposal to cut payments to Medicare Advantage plans next year, as much as 7 to 8 percent. This cut could lead to higher premiums, reduced services to seniors and lack of business for insurers.
Later, the Centers for Medicare and Medicaid Services (CMS) did an about-face and decided to increase payments by 3.3 percent. It is probable that the proposed payment increases could average $50 or more per month for a typical MA beneficiary. CMS has said the changes came in an effort to improve payment accuracy and program stability.
Additionally, a basic health insurance license is not enough to sell MA plans. CMS requires that all licensed sales representatives, agents and brokers complete a CMS certification program before they can start marketing those products. In some states, insurance carriers will pay the costs of the certification for its agents.
Although Medicare Advantage plans must provide certain required coverage, insurance carriers do have leeway to adjust or increase certain provisions of the plans. Since enrollees are committed to the policy for at least a year, it’s important for them to understand exactly what they are buying and for agents to educate.
It’s a constant battle for the insurance technology industry to implement the latest technological advances. Private insurers need a platform specifically tailored to help insurers achieve a five-star rating and streamline their activities related to selling Medicare Advantage plans. This type of technology will reduce CMS Complaint Tracking Module (CTM) incidents and ensure compliance, which can be a major headache for those selling MA plans. A platform encouraging productivity and efficiency allows the carrier to focus on the product and the agent to focus on selling.
Given the real-time world we live in, instant access technology is a plus — by immediately responding to CMS-compliant training and materials through web portals, carriers are always equipped with highly-trained and licensed producers. Better trained producers proactively address client questions and reduce CTM cases filed against the insurance company, bringing insurers closer to a 5-star rating.