Medicare Advantage Members Have Fewer ER Visits Than Original Medicare

We’ve talked about Medicare Advantage plans recently, and how they compare with Original Medicare. In those articles, we’ve talked about the benefits of each, and how to decide which one is right for you.

Here’s a compelling reason for choosing Medicare advantage: you have a lower chance of hospitalization and emergency room visits.

Health research firm Avalere Health published an interesting study this month about Medicare Advantage results as compared to Original Medicare.

Take a look at the key points:

  •  Medicare Advantage plans have more members with disabilities and chronic health conditions compared to Original Medicare.
  • Medicare Advantage plan members have a 57 percent higher rate of serious mental illness and 16 percent higher rate of substance abuse than Original Medicare.
  • Despite the above, Medicare Advantage members had 23 percent fewer hospital stays and 33 percent fewer ER visits than members of Original Medicare.

Part of the reason for this is that Medicare Advantage encourages preventative services and tests that Medicare sometimes doesn’t even pay for. While the study found MA members paid slightly more than Original Medicare members, their health outcomes were significantly better.

The study also found that Medicare Advantage outperformed Original Medicare in key areas. Their rate of potentially avoidable hospitalizations was 29 percent lower than Original Medicare’s, their overall hospitalization rate was lower, and they had higher rates of medical screenings and tests.

The widest gap was in outcomes for diabetics with both high blood pressure and high cholesterol. Compared to Original Medicare, MA diabetics were half as likely to suffer complications. Their rate of serious complications was 73 percent lower as well.

Medicare Advantage accomplished this while keeping costs down—their spending average was 6 percent less than Original Medicare’s spending for members with the same conditions. In addition, member costs were 21 percent lower.

“Medicare Advantage plans’ focus on preventive care may help avoid downstream utilization of high-cost services driven by acute-care and emergency needs,” said Christie Teigland, vice president at Avalere.

While Medicare Advantage is not right for everyone, it’s clear that it offers some pretty big advantages for many of their members.

Medicare Advantage Plans Closer to Covering Long-Term Care

The Centers for Medicare & Medicaid Services announced in May that Medicare Advantage plans can expand their coverage of supplemental benefits. Starting in 2019, Medicare Advantage plans will be able to offer coverage of services like respite care, non-hospice palliative care or home safety modifications. Industry experts are saying this can move Medicare Advantage closer to covering long-term residential care one day.

A major downside of Medicare as it’s currently formulated is that it doesn’t cover custodial long-term care. That means if a senior doesn’t need specific skilled nursing care, but can no longer live on their own, they either need to pay for the facility out of pocket, or exhaust all their assets to go on Medicaid. Paying for long-term care is a huge financial burden on many seniors who aren’t eligible for Medicaid. The new rules will allow Medicare Advantage plans to cover in-home support services, like help with activities of daily living. Such coverage may one day lead to coverage of non-skilled nursing facility stays.

How Big is This Change Exactly?

While the changes will probably be modest in the beginning, the paradigm shift is huge. Until now, Medicare Advantage plans mainly covered whatever Original Medicare covered, with some additions like dental or vision coverage. Now, in an attempt to save more in preventable medical expenses in the long run, they will have an expanded definition of “health-related” services. The new guidelines, according to CMS, will “consider an item or service as primarily health related if it is used to diagnose, compensate for physical impairments, acts to ameliorate the functional/psychological impact of injuries or health conditions, or reduces avoidable emergency and health care utilization.”

This opens the door for long-term care services to gain coverage under CMS. In the beginning it may cover home-health services, and then it may eventually expand to cover some nursing home expenses.

Of course, these services will be subject to restrictions and requirements for coverage. Your doctor or other healthcare provider would have to recommend the service, and there will likely be copious paperwork. It’s also likely that the Medicare Advantage plans will decide eligibility for specific services based on the member’s medical needs and history. Either way, the program expansion is great news for Medicare Advantage members, and will probably increase the private plans’ share of the Medicare market.

Here are some services you can expect to see covered next year:


Part Two: Original Medicare vs Medicare Advantage

Welcome back to our two-part series about the costs and benefits of Original Medicare and Medicare Advantage. In our last post, we talked about how Original Medicare can leave you on the hook for thousands of dollars a year. One way to reduce that financial burden is to join a Medigap plan for as little as $60 a month. Today let’s discuss the other option: Medicare Advantage plans.

Medicare Advantage

Sometimes called Medicare Part C, Medicare Advantage (MA) plans must cover all services Original Medicare does, except hospice care. (When a patient gets admitted to hospice, their coverage automatically reverts to Original Medicare.) MA providers can also  offer other benefits—such as prescription drug coverage, dental care, and vision plans—in order to stay competitive.

As we explained last time, Medicare contracts with private insurance companies to offer Medicare Advantage plans. Medicare pays the private insurer a set amount per beneficiary per month, and they use the funds to cover your medical costs. Beneficiaries who choose MA plans are still part of Medicare, and still pay their Medicare Part B premiums. Some MA plans don’t charge above your Medicare premium, while other plans can cost as much as an extra $200 a month. The three most common types of plans are:

  • Health Maintenance Organization (HMO)
  • Preferred Provider Organization (PPO)
  • Private Fee-for-Service (PFFS)

Each type of plan has different rules, restrictions, and networks. Approximately 21 percent of New Jersey seniors enrolled in an Advantage plan in 2017. Let’s explore the pros and cons of Medicare Advantage:

The Plus Side of MA: Extra Coverage

The main draw of MA plans is that they usually provide benefits for some of Medicare’s non-covered services. Prescription drug coverage continues to be a problem for seniors under Medicare. Part D, Medicare’s optional prescription drug plan, has serious gaps in coverage that can cost thousands of dollars a year. By contrast, many MA plans offer broad drug coverage with much smaller co-payments. Plus, they often offer dental and vision coverage, unlike Original Medicare.

When it comes to care in a skilled nursing facility, some MA plans don’t require the  3-day qualifying inpatient stay Original Medicare demands.

Another benefit is that while the co-payments are often higher than Original Medicare’s, most MA plans have an out-of-pocket maximum. That means once you’ve paid a certain amount of co-payments, your insurer will pay your out-of-pocket expenses for the rest of the year. If you need a surgery, for example, you’ll probably reach your out-of-pocket maximum fairly quickly—leaving you with no out-of-pocket costs for the rest of year. In Original Medicare, you always have to pay the 20% copay, regardless of how much you’ve already paid.

The Downside of MA: Less Standardization

Since private insurers administer the MA plans, they can apply their own rules to the Medicare plan. While the basic coverage is the same, the plans have much more flexibility in how to apply your coverage. Here are some of the things you can expect from a private insurer:

  • Higher premiums, deductibles, and co-payment amounts. These plan details can change from year to year.
  • Stricter rules for coverage of certain services and products. You may be required to get a referral  from your primary doctor in order to see a specialist. You may also be required to stick to doctors or hospitals in the plan’s network. Tip: HMO plans are generally cheaper than PPO, but restrict you to a smaller network of medical providers.
  • No guaranteed plan renewal. Advantage plans have annual contracts with Medicare, so if your provider chooses not to renew their contract, you’ll have to find a new insurer.
  • No out-of-state coverage. Original Medicare offers you a nation-wide coverage. It’s the same in every state, so if you travel often, you can use your Medicare coverage anywhere you go. Medicare Advantage often only covers you regionally.

Which Plan is Right for Me?

Now that you know more about Original Medicare and Medicare Advantage, you are more equipped to make the decision based on your personal circumstances. If you have high prescription medication costs, you might prefer an Advantage plan, while if you split your time between two states, Original Medicare is probably the way to go. Because MA plans are not standardized, make sure to check the benefits of each one before you choose a plan. A licensed insurance agent can help you find the plan to best suit your needs.