As you prepare to enter Medicare, you’ll doubtless encounter all kinds of advertising, solicitation, and marketing. You may also ask people their opinion as to what kind of coverage you should choose with your base Medicare benefits. If you do ask, you’ll realize one fact very quickly: people have very strong opinions about every facet of the Medicare program. Probably the strongest emotions and opinions have to do with Medicare Advantage plans. Many people intensely dislike these plans. If you want to know, Why is Medicare Advantage bad, read this quick guide to get an unbiased review of Medicare Advantage plans.
Why Do People Care In The First Place?
It will be helpful to start out by reviewing why people have to make a decision about Medicare Advantage in the first place.
The main reason boils down to gaps in the Original Medicare program, Parts A and B. These programs were designed with certain “gaps” – costs that you’re expected to pay out of pocket, and in some cases specific services that aren’t covered by Original Medicare at all.
There are two main options available to get help with these gaps:
- Medicare Supplement Insurance (Medigap)
- Medicare Advantage Plans
Traditionally most people have chosen Medicare Supplement Insurance. However, since the late 1990s, Medicare Advantage plans have been growing in popularity. Generally speaking, people are interested in Medicare Advantage plans for some or all of these reasons:
- They are more affordable than Medicare Supplement plans
- They cover key services not available under traditional Medicare (like vision, hearing, and dental)
- They sometimes provide prescription drug coverage
While these factors create interest in Medicare Advantage plans, there are a number of characteristics of these plans that turn people off. Generally the criticisms of Medicare Advantage plans fall into these categories:
- Network restrictions and referral requirements
- The level of out of pocket expense for services and procedures
- Unpopularity with providers
We’ll dive into the details of each of these concerns.
Network Restrictions And Referral Requirements
Probably the biggest complaint from consumers (individual Medicare beneficiaries) is the presence of network and referral requirements. There is no doubt that Medicare Advantage plans utilize networks and often rely on referrals from Primary Care Physicians to specialists.
Most Medicare Advantage plans use one of two operating structures:
- Health Maintenance Organization
- Preferred Provider Organization
Health Maintenance Organizations (HMOs) are usually the most affordable option, and also the kinds of plans that generate the strongest feelings. With an HMO, you simply must use the providers that are in the network. If you use a non-network provider, an HMO plan won’t cover it. Since HMOs don’t contract with every provider in a state or area, you are essentially limited in the providers you can see. Many people hate this arrangement since under Original Medicare you can see any provider in the country that accepts Medicare.
Beyond this, with HMOs you also need referrals from your primary doctor in order to see specialists or have tests run. HMOs are doctor driven. The theory behind this arrangement is that by having care managed by a central point of contact, no unnecessary tests or treatments will be given, saving money.
Preferred Provider Organizations (PPO) also have networks, but they are much less rigid than HMOs. With PPOs, you’ll pay lower costs if you use the in-network providers, but you have the freedom to go out of network. Most PPOs also allow you to self-refer to specialists so you won’t need to get referrals from your primary doctor.
The bottom line is that whether PPO or HMO, many people feel that Medicare Advantage plans are too restrictive compared to Original Medicare and Medigap coverage.
Out Of Pocket Expense For Services And Procedures
Generally speaking, you’ll have to pay a co-payment or co-insurance amount for the services and procedures you use if you have a Medicare Advantage plan. While these amounts are generally small (similar to what you’d pay under Original Medicare), they are often more than you’d have to pay if you chose Medicare Supplement Insurance. In fact, the most comprehensive Medicare Supplement Plans available (Plans F and G) either prevent you from incurring any out of pocket expense during the year, or limit it to only a couple hundred dollars.
By contrast, Medicare Advantage plans many times have out of pocket maximums (the most you would ever pay during one year) that are $5,000 or even $6,000. In other words, Medicare Advantage provides much less comprehensive coverage when compared to most Medicare Supplement Insurance.
Even if you don’t get near the maximum out of pocket cap, many people feel like they are “nickel and dimed” by Medicare Advantage plans, and therefore dislike them.
Unpopularity With Providers
You may discover that the people with the strongest opinions about Medicare Advantage are medical providers – often front desk or billing staff. These people tend to dislike Medicare Advantage because they require more work than either Original Medicare or Medicare Supplement Insurance.
For instance, Medicare Advantage plans often require “pre-authorization” for various services and procedures. Since there are many Medicare Advantage plans, each with their own rules and requirements, their work is multiplied.
Beyond this, most Medicare Advantage plans have fixed payments, both in terms of how much their members pay to providers (co-payments), and also in terms of how much the plan will pay the provider. Once again, since there are so many different plans, there is a lot of complication.
Another possible reason why providers dislike these plans is because Medicare Advantage plans tend to exert downward pressure on the prices for services and procedures. The plans want to provide lower and lower costs in order to attract and keep more members. This means that the plan wants to pay increasingly small amounts to providers, which of course can help explain their dislike for Medicare Advantage plans.
Is A Medicare Advantage Plan Ever Good?
As you no doubt know, feelings and opinions are subjective. Beauty, as they say, is in the eye of the beholder. Medicare Advantage plans can be an excellent choice for some people. This is especially true for people with limited incomes. Medicare Supplement premiums can eat into fixed income sources like Social Security, especially as you get into your 80s and 90s.
Besides, this, Medicare Advantage plans offer real help with services and coverage that’s not available with Original Medicare (or Medicare Supplement Insurance), including:
- Dental (routine and sometimes comprehensive)
- Vision (lenses and frames)
- Hearing (exams and discounted hearing aids)
Other Extra Benefits are sometimes available beyond those listed here.
Additionally, the complaints of providers are potentially self-motivated. And keep in mind, your financial goals are at least potentially opposed to theirs: you want to pay as little as possible, and they want to make as much as possible. Because of this fact, you should probably not be overly swayed by their arguments.
Choosing Coverage That’s Right For You
We’ve set out to answer the question, Why is Medicare Advantage bad? We determined that there were a few areas of concern, but that this program may well be a good fit for many people. If you want unbiased help choosing a plan, reach out to us today. You can request a free consultation, review of plans in your area, and quote comparisons. Schedule your consultation today.