Medicare Advantage (MA) is the private health plan alternative to the original Medicare. The U.S. federal government requires Medicare Advantage (also called Part C) plans to provide all benefits and services covered by Medicare Parts A and B. Health maintenance organizations (HMOs), preferred provider organizations (PPOs), special needs plans (SNPs), private fee-for-service plans (PFFS), and Medicare Savings Accounts (MSA) are various types of
to the enrollees. Depending on the MA plan a person enrolls in, deductibles and copayment amounts can vary. Many MA plans include prescription drugs (Part D) too. In 2023, over 50 percent of Medicare beneficiaries had
, and the MA penetration rate has roughly doubled in the past decade. UnitedHealthcare is the largest Medicare Advantage organization (MAO), with nearly 8.9 million members enrolled in 2023.
Special Needs Plans (SNPs)
Medicare SNP is a type of MA plan which offers extra services to meet the unique healthcare needs of the targeted population.
Chronic condition SNP (C-SNP), dual eligible SNP (D-SNP), and institutional SNP (I-SNP) are the three types of coverage options available to individuals who qualify to enroll in SNPs. Different eligibility criteria apply to each of the
three types of SNPs. All SNPs are coordinated care plans designed using an approved Model of Care (MOC) to provide treatment and care management. In 2023, over 5.7 million people were
enrolled in special needs plans (SNPs), majority of them enrolled in D-SNPs. Compared to MA plans, SNPs are likely to provide non-medical benefits. SNPs are growing in popularity, accounting for roughly 20 percent of MA enrollments in 2024.
MA funding and costs
Funds for Medicare are used to pay for
health services provided by MA plans. The MA payment system is very complex, it is based on benchmarks, bids, rebates, quality bonuses, risk adjustments, and medical loss ratio. These factors can combine to lead to Medicare overpayments, it is estimated that incorrect coding is the most common reason for
overpayments to MA plans. In 2024, MA accounted for 54 percent of total federal Medicare spending. MA enrollees pay a monthly premium for Medicare Part B. MA plan members have an annual capping on out-of-pocket (OOP) costs which is not available in original Medicare. In the United States, across all health plans, the MA market has offered health insurers a higher
gross margin per enrollee. Currently, U.S. politicians are engaged in a debate on how to ensure the sustainable funding of Medicare in the future, following proposals for changes to its funding in 2024.
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