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Home / News & IndustryManaged Care Insight and Analysis
Updated: September 1, 2009
Study Documents Benefits And Out-Of-Pocket Costs For Enrollees In Medicare Advantage

Two new reports using recent public data from the Centers for Medicare and Medicaid Services document premiums and benefits, along with out-of-pocket costs, Medicare Advantage enrollees experienced in 2008 and describe how the plans are changing in 2009.

The first report documents how benefits and premiums in Medicare Advantage plans with prescription drug coverage (MA-PDs) changed from 2008 to 2009.

Highlights include the following:

  • About 350,000 enrollees, mostly in private fee-for-service plans, had to switch plans in 2009 because their 2008 plans were no longer offered.
  • Enrollees favored lower-premium plans, with an average premium of $46 per month; 54 percent were in a plan with no premium.
  • Almost all MA-PD plans in 2008 and 2009 offered an "enhanced" Part D benefit (a plan with an actuarial value greater than the standard Part D requirements). However, only 46 percent of enrollees in 2008 were in a plan with a limit on out-of-pocket cost sharing required for Medicare Part A and B benefits (hospital and physician cost sharing).

The researchers estimated that the average MA-PD enrollee paid $413 out-of-pocket in 2008 (and $421 in 2009), but the amount varied widely across plans and was much higher in regional PPOs ($928 in 2008) and lowest in HMOs ($350) in 2008.

Regardless of plan type, costs were highest for enrollees with chronic needs who need considerable care — ranging from a low of $1,801 in HMOs to a high of $3,359 in regional PPOs.

The second publication offers a more detailed look at MA benefit structures and how they compare to standard Medigap options. MA plans simplify cost sharing for Medicare Part A and B benefits, with most plans eliminating inpatient day limits and shifting from deductibles and coinsurance towards fixed dollar copayments. Though benefits vary across plans, MA enrollees typically receive much less financial protection against high out-of-pocket costs than Medigap offers.

Supplemental benefits tend to reduce cost sharing for preventive care and provide a limited amount of coverage for relatively predictable needs such as eyeglasses, hearing aids, and preventive dental care. Findings also highlight the wide variability in benefit structures across MA plans, even of the same type, and some challenging distinctions that beneficiaries are asked to make when comparing theseplans and original Medicare.

"The findings highlight characteristics that attract beneficiaries but raise policy issues because financial exposure under MA can remain relatively high," said Marsha Gold, lead author of the study and a senior fellow at Mathematica. "Policymakers may want to consider requiring out-of-pocket limits and enhanced education for beneficiaries to better assess their financial exposure. Findings also highlight ways of simplifying certain benefit structures to reduce variation and make it easier for beneficiaries to compare plans."

Mathematica Policy Research Inc., conducted the research with support from the AARP Public Policy Institute.

Address: Mathematica Policy Research, Inc., P.O. Box 2393, Princeton, NJ 08543; (609) 799-3535,

  This article was taken from:
The Executive Report on Managed Care

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