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Kaiser Analysts: Medicare Advantage Looks Fine

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Current law calls for the federal government to start reducing maximum payments to Medicare Advantage plans in 2012.

For now, however, the Medicare Advantage market looks healthy, according to a team of analysts led by Marsha Gold of Mathematica Policy Research, Princeton, N.J.

The Henry J. Kaiser Family Foundation, Menlo Park, Calif., has published their Medicare Advantage market analysis in a new brief.

The analysts report that the country will have 1,974 Medicare Advantage plans in 2012, down 1.8% from 2,011 this year.

In 2012, the average Medicare beneficiary will be able to choose from a menu of 20 Medicare Advantage plans, including 10 health maintenance organization (HMO) plans, 4 local preferred provider organization (PPO) plans, 2 region PPO plans, and 3 private fee-for-service (FFS) plans.

The average rural beneficiary will be able to choose from a menu of 13 Medicare Advantage plans.

Medicare Advantage carriers started selling private FFS plans in 2003. The Centers for Medicare & Medicaid Services (CMS) began imposing marketing constraints in response to concerns that overly aggressive marketing practices were contributing to the private FFS plans’ rapid growth in market share.

In 2010, because of allegations that Medicare Advantage private FFS were making excessive use of health care services, CMS began to require the private FFS plans to use provider networks.

The requirement contributed to a rapid reduction in the number of private FFS plans. The number of private FFS plans peaked at 696 in 2009, fell 41% in 2010, and then fell another 47% this year.

In 2012, the number of private FFS plans will be 201, down 8.6% from the total this year, the analysts say.

About 62% of all Medicare beneficiaries and 71% of the beneficiaries in rural areas will have access to at least one private FFS plan, the analysts say.


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