3 ways health care reform changes Medicare Advantage programs
The health reform law, the "Patient Protection and Affordable Care Act," makes a number of changes to Medicare Advantage. If you are a Medicare Advantage enrollee or interested in switching from traditional Medicare to Medicare Advantage, you should have a basic understanding of the program so that you won't be left in the dark.
Lawmakers included changes to Medicare in the recent reform law to accomplish three goals:
- Reduce payments to Medicare Advantage plans in order to help ensure the solvency of Medicare for future generations.
- Reward plans that provide higher quality services and benefits with bonuses.
- Strengthen your protections and rights if you're enrolled in a Medicare Advantage plan.
So what is Medicare Advantage and why change it?
Medicare Advantage is a public health insurance program that allows beneficiaries the option of enrolling in private health plans for Medicare benefits as an alternative to enrolling in the traditional fee-for-service Medicare program.
According to the Kaiser Family Foundation, before the health reform law was implemented, policymakers determined that Medicare payments to private insurance plans were 9 to 13 percent higher, on average, than traditional fee-for-service costs. Because these plans were receiving higher reimbursements, often for the same quality of benefits and services as traditional plans, lawmakers sought to change the program, as well as strengthen it for consumers.
Goal 1: Equalizing payments across Medicare program
The health reform law gradually decreases Medicare payments to plans over a four year period (from 2011 to 2014) to bring payments closer to average costs of Medicare beneficiaries by county, according to Kaiser Family Foundation. In order to accomplish this fairly across the country and share the risk, plans in counties who currently have higher fee-for-service costs than the other counties nationwide (i.e. counties such as Miami-Dade in Florida) will receive lower payments from Medicare than pans in counties with low fee-for-service costs, such as Boise, Idaho.
Goal 2: Bonuses to plans that provide higher quality services
To ensure plans continue to cover the services you need as a Medicare Advantage enrollee, a health plan quality ranking system was developed that provides plans with bonuses for covering and providing quality services. The Kaiser Family Foundation explains that plans that receive four or more stars, on a five star ranking system, will receive bonus payments of 1.5 percent in 2012, 3 percent in 2013, and 5 percent in 2014 and later years; high quality plans in certain counties are eligible to receive double bonuses.
Goal 3: Stronger consumer protections
In an effort to protect your rights, as well as your pocketbook, the 2010 health reform law will implement the following protections:
- Enrollees in Medicare Advantage Prescription Drug plans will be entitled to improved coverage in the Part D coverage gap (known as the donut hole).
- Beginning in 2011, Medicare Advantage plans will be prohibited from having higher cost-sharing requirements than traditional fee-for-service Medicare for various treatments and services such as renal dialysis, chemotherapy, skilled nursing care and other services deemed appropriate.
- Starting in 2014, Medicare Advantage plans will have federally set limits on the amount they can spend on administrative expenses, including profits, which may ensure your money is going to medical services and keeping overall costs down.