Performance Improvement 2007. What Do We Know About Medicare Advantage Plans?



Most of the 43 million elderly and disabled people on Medicare (81%) have their health bills aid by the traditional fee-for-service program; 19% (8.3 million) receive their Medicare benefits through private health plans that receive payments from Medicare, now generally known as "Medicare Advantage" plans. This study identified a baseline of timely, policy-relevant information about Medicare Advantage health care service delivery products, analyzed how these products compared to past offerings when only local Medicare Advantage options were available, and examined the initial planning decisions and experiences under the new statutorily-specified competitive bidding process through which health insurance organizations are approved to offer Medicare Advantage.

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) made many changes to the Medicare Advantage program, including establishing regional preferred-provider organization plans, and expanding the number of private fee-for-service plans. In addition, regional and local Medicare Advantage plans were approved to provide Medicare beneficiaries with a comprehensive set of benefits, including a new prescription drug benefit. The study included both quantitative analyses of existing administrative data available primarily from the Centers for Medicare and Medicaid Services and qualitative analysis based on discussions with individuals in a number of diverse health insurance firms. These discussions focused learning how insurers made coverage decisions and arrived at insurance marketing strategies. This study found that the growth in Medicare Advantage contracts in 2006 made these plans more available to beneficiaries, especially in rural areas.

Although many firms participated in the Medicare Advantage program, a small number dominated. Health maintenance organizations still accounted for most enrollments in Medicare Advantage. However, other health insurance and health care services products, especially private fee-for-service health care plans also drove much of the enrollment growth.

Report Title: Analysis of the Characteristics of Medicare Advantage Plan Participation: Final Report
Agency Sponsor: ASPE, Office of the Assistant Secretary for Planning and Evaluation
Federal Contact: Cox, Donald, 202-690-6597
Performer: Mathematica Policy Research, Inc.; Princeton, NJ
PIC ID: 8477

View full report


"PerformanceImprovement2007.pdf" (pdf, 717.63Kb)

Note: Documents in PDF format require the Adobe Acrobat Reader®. If you experience problems with PDF documents, please download the latest version of the Reader®