Projections show that Medicare Advantage plans will cover nearly 21 million patients in 2018, a 5 percent increase from last year. Per the Kaiser Family Foundation, in 2017, the popularity of these plans rose to 33 percent. The current rise in popularity of Medicare Advantage Plans is in stark contrast to their utilization in 2006 when only 16 percent of patients opted to participate in these plans. So, why are so many patients turning to Medicare Advantage plans now?

It’s All About the Benefits

Many patients are opting to use Medicare Advantage plans for several reasons. First, they offer a more straightforward, single plan for patients. Secondly, the customer satisfaction among patients with these plans is exceptionally high. Finally, the plan premiums are lower than traditional market-based plans.

There is also the bonus of additional benefits that are expected to grow in the future. Currently, Medicare Advantage plans cover expenses such as dentistry, eyeglasses, hearing aids, and gym memberships which traditional Medicare doesn’t cover. Moreover, this past spring government officials announced that they are “reinterpreting” the definition of “supplemental benefits” for Medicare Advantage plans. This means if an expense is deemed health-related, it will be covered. These expenses will include programs and items such as adult day care, home aides, and safety devices (grab bars and wheelchair ramps). In 2020, benefits will be even more extensive with potential telehealth programs being covered.

With so many benefits available and expanding in the future, patients will continue to opt for these plans in higher numbers. As more patients enroll in these plans, what is the impact on providers?

Medicare Advantage Plans: How Do They Affect Providers?

While Medicare Advantage plans offer cost savings to patients, these plans reimburse providers at much lower rates than traditional Medicare. This can cause a provider or practice to lose money when providing care to a patient who uses a Medicare Advantage plan, in comparison to other Medicare patients or patients with other insurance.

Conversely, if a provider is not within the Preferred Provider Network, they may lose some of their current patients who, when eligible, decide to enroll in a Medicare Advantage plan. Once enrolled, these patients may seek care from only in-network providers to avoid high out-of-pocket costs or risk care not being covered.

Should Providers Accept or Continue to Accept Medicare Advantage Plans? Low Rates vs. Patient Volume

While Medicare Advantage plans offer lower provider reimbursement, accepting these plans can be a benefit to providers and healthcare organizations. Though the per-patient reimbursement rate is lower for Medicare Advantage plans, the amount of patients covered by these plans is rather significant. For example, currently, more than one-third of patients are covered by Medicare Advantage plans. In 10 years, it is projected 42 percent of patients will enroll in these plans.

When considering whether to accept these plans, much of the decision will depend on what patient population a practice or healthcare organization currently serves. For many providers, the increase in patient volume that could be experienced by accepting patients who use Medicare Advantage plans could significantly offset the reduced reimbursements.

Moving Forward With Medicare Advantage Plans

Medicare Advantage plans are here to stay, and their enrollment is expected to grow dramatically in the future, especially if current projections become a reality. While these plans benefit patients greatly, they do mean lower reimbursement rates for providers and healthcare organizations in comparison to traditional Medicare patients, or patients with other insurance plans. When a provider or healthcare organization is deciding whether to accept these plans, it is imperative they analyze their patient population and the current volume of patients they serve.

In the end, one size doesn’t fit all. A provider or healthcare organization needs to evaluate their situation and decide for themselves if these plans make sense for their practice and their budgets.

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