The Problem with Medicare Advantage Plans
Key Takeaways
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Medicare Advantage, also known as Medicare Part C, is intended as an alternative to Original Medicare. However, Medicare Advantage lacks consumer protections and critical coverage.
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Recent reports find that Medicare Advantage plans were substantially overpaid, with these overpayments benefiting plans themselves — not the enrollees.
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Many Medicare Advantage enrollees feel trapped in their plan due to out-of-pocket costs associated with Medigap coverage barriers.
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Enrollees have higher mortality rates in some scenarios when compared to Original Medicare beneficiaries.
As more studies and data are being reported, problems with Medicare Advantage plans are exposed. Insurance agents use pushy sales tactics, plans have restrictive prior authorization requirements, and more. Medicare Advantage plans are offered by private companies, intended as an alternative to Original Medicare.
Barriers with Medicare Advantage can make it difficult to get treatment for potentially critical conditions, such as diabetes or thyroid problems. It's important to understand Medicare Advantage's limitations and red flags to avoid insurance coverage issues and keep yourself safe.
Medicare Advantage: A Brief History
The idea of private Medicare plans was introduced in the 1970s as a concept to reduce Medicare spending. However, in 2024, the Congress’s Medicare Payment Advisory Commission determind the government paid 22% more for enrollees in Medicare Advantage than if the participants had Original Medicare Coverage.
Initially, Medicare Advantage seemed to make sense. Original Medicare is composed of three parts: Part A (hospital coverage), Part B (doctor visits), and Part D (drug coverage). Instead of a split of coverage, Medicare Advantage bundles Part A, B, and D coverage into one single plan. Medicare Advantage typically has a single affordable premium (sometimes $0), extra benefits, and a maximum out-of-pocket spending limit.
Red Flags to Be Aware Of
To best understand the red flags of Medicare Advantage, it's important to understand the green flags of Original Medicare. For example, Original Medicare has less restrictive prior authorization requirements for health care items and services.
With Medicare Advantage, the plan is far more restrictive when determining if your service or item is medically necessary. This means its more common Medicare Advantage enrollees to face coverage delays, denials, or termination of a coverage provision, according to a report from the Center on Budget and Policy Priorities.
Medicare Advantage Cons
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Billing required before service: Original Medicare bills you after services are completed, while Medicare Advantage requires payment upfront.
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Restrictive coverage: Medicare Advantage has extensive prior authorization requirements compared to Original Medicare. The network to find care is more restrictive as well, which can result in higher out-of-pocket costs.
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Current enrollees feeling trapped: A 2024 Health Affairs Scholar study found many Medicare Advantage enrollees wanting to unenroll once facing expensive treatments. However, enrollees had difficulty due to a lack of consumer protection policies.
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Gimmicky sales practices: Many insurance agents pushing Medicare Advantage plans use aggressive sales practices. Some "benefits" of these plans, aren't even available or outweigh the cons.
A limited network can be severe for some. According to a recent Journal of Clinical Oncology study, Medicare Advantage beneficiaries faced a significantly higher mortality rate after specific procedures (with the exception of colon surgery). This study was based off of 76,655 beneficiaries.
An Expert Take on Medicare Advantage
David S. Klein, MD, has a firm stance of Medicare Advantage — avoid it if you can. "The advertised Medicare 'Advantage' is the commission that the insurance company and their sales agents pull from your benefits from Medicare."
"When they cut it down with the Advantage Plan, it is clearly to your 'Disadvantage.' You lose the ability to see who you want, where you want and you have to choose from their list of contracted doctors. " Dr. Klein's statement aligns with recent study findings, further cementing that Original Medicare is likely better for most.
Dr. Klein also highlights the issues with Medicare Advantage benefits. "They offer 'new Medicare benefits,' such as cheap gym memberships, sun glasses, gym shorts and what not.
"These 'benefits' are cheap compensation for the thousands of dollars in moneys that they take off of the top from the government. The government makes out because they limit what you can receive in treatment, resulting in lower quality, poorer availability, and decreased accessibility."
Remember, deceased accessibility for Medicare Advantage enrollees has resulted in higher mortality rates after some procedures. This alone is a good reason to consider Original Medicare, which is recomended by Dr. Klein.
"I recommend to my patients that they use Original Medicare and shop for the appropriate pharmacy program for supplement coverage. You do this by looking at your medications, the most expensive first, and then find which plan covers that medication cluster."
"Above all, do not let the insurance sales people talk you into using the same company because it is 'convenient.' It is convenient in guaranteeing them a more juicy commission. I am not an insurance agent, but this approach has served my patients well for the past 30 years. Further, this is also exactly what I am doing for myself."
Switching from Medicare Advantage to Original Medicare
Unforchunately, you can't just switch from Medicare Advantage to Original Medicare on a whim. You can only switch plans once a year, during Oct. 15 to Dec. 17. This is the Medicare Open Enrollment Period. However, there are state restrictions for enrolling in a Medigap policy (which provides additional coverage).
Anyone enrolled in a Medicare Advantage plan for one year is unable to enroll in a Medigap policy in most cases. This is another pain point for current Medicare Advantage enrollees, making them feel trapped. Contact your State Health Insurance Assistance Program (SHIP) to get free insurance counseling. That way, you can ensure the coverage meets your goals and budget before setting up an appointment with the Stages of Life Medical Institute.