Medicare Advantage: Know the Pitfalls

Baby boomers on Medicare are streaming into Medicare Advantage plans, with nearly 18 million people currently enrolled in them.

But a new study identifies pitfalls that might not be obvious to those signing up.

Advantage plans are HMOs or PPOs that provide both basic Medicare Part B coverage and many of the benefits offered by supplementary Medigap insurance policies.  But Medicare beneficiaries’ premiums for an Advantage plan plus Medicare Part B coverage are roughly half, on average, of the premiums for a Medigap policy plus Part B.

One reason is that Medigap policies typically cover more out-of-pocket costs. Another is that insurers offering Advantage plans assemble networks of hospitals and physicians to control their costs and reduce customers’ premiums.

But, the researchers point out, Advantage plans frequently limit “access to certain providers and increase the cost for care obtained out-of-network.”

Medicare chart

In nearly half of the 20 U.S. counties examined in a new study by the Kaiser Family Foundation, Advantage plans had limited networks of hospitals, potentially increasing consumers’ costs. Further, a large majority of Advantage plans did not include their county’s top-quality, high-cost cancer treatment center in the networks of approved health care providers.

And it can be very difficult to compare access to care and the future out-of-pocket medical costs that will result from a decision to go with an Advantage plan. Costs vary greatly among Advantage plan networks, with coverage often described in complex, incomplete, or confusing insurance plan documents, Kaiser said.

Consumers also face a dizzying array of choices.  One example: In Cook County, which includes Chicago, eight difference insurance companies are selling 19 Advantage plans with 10 different provider networks.

Many retirees learn the ins and outs of the network only after they try to access medical care under the plan.  The Kaiser report’s key findings provide a roadmap of things consumer should watch for: …
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