Fact Sheet

Medicare Advantage and Prescription Drug Plan Fact Sheet

 

Programs

Medicare Advantage (MA) is also known as Medicare Part C, and is an alternative for beneficiaries to Original fee-for-service Medicare. These MA beneficiaries must be enrolled in both Medicare Part A and Part B, and continue to pay Part B premium. Under the MA program, Medicare contracts with and pays private plans to provide benefits and cover services for applicable beneficiaries during annual open enrollments or upon becoming eligible. Open enrollment period currently runs from November 15 – December 31st. Medicare contracts with private plans under this MA or other prepaid categories:

  • Local HMOs
  • Local  PPOs
  • Private Fee-for-Service plans (PFFS) authorized in 1997, were not required to establish networks, will generally be required to do so but beginning in 2011
  • Special Needs Plans (SNPs), restricted to beneficiaries who are dually eligible for Medicare and Medicaid; live in long-term care institutions (or would otherwise require an institutional level of care); or (3) have certain chronic conditions.
  • Regional PPOs, established to provide rural beneficiaries greater access to MA, and cover entire statewide or multi-state regions.
  • Other types of private plans outside the regular MA program (e.g., cost plans, HCPP, PACE, medical savings accounts, demonstrations and pilots)

The Medicare Prescription Drug Program, also known as Medicare Part D, is available to beneficiaries enrolled in Medicare Part A or Part B, who choose to enroll in a Medicare prescription drug plan, either a stand-alone Part D plan or a Medicare Advantage plan with prescription drug coverage.  

 

Enrollment

As of April 2011, there were 12,236,646 enrollees in Medicare Advantage related programs, including 82.1% in Local HMOs and Local PPOs; 4.9% in PFFS plans; 9.3% in Regional PPOs and 3.7% in Other Programs including Cost, PACE, MSAs, and pilots. 87.5% of these MA beneficiaries had a MA prescription drug plan; 10.8% were Special Needs Plans enrollees; and 18.2% were Employer Plan enrollees. 1

The top five states for Medicare Advantage enrollment as of April 2011, which account for 43% of total MA enrollment, are as follows: California - 1,750,525; Florida - 1,087,044; New York - 934,543; Pennsylvania - 878,185; and Ohio - 647,603. There are eleven states and territories with over a one-third penetration rate (compared to the national overall rate of 25.6%): Puerto Rico - 68.4%; Minnesota - 44.6%; Hawaii  - 42.7%; Oregon - 41.1%; Pennsylvania  - 38.3%; Arizona - 37.1%; California - 36.3%; Rhode Island - 34.9%; Utah - 34.6%; Colorado - 33.9%; and Ohio- 33.9%. 2

As of April 2011, there were 18,598,538 enrollees in Medicare Prescription Drug Plan enrollees, including 9.3% that are Employer Plan enrollees. 1   The top five states for PDP enrollment, which account for 32% of total PDP enrollment, are as follows: California - 1,683,820; Texas - 1,197,975; Florida - 1,104,049; New York - 999,667; and Illinois - 908,002. There are eleven states with over a 50% penetration rate (compared to the national overall rate of 38.8%): North Dakota - 63.7%; South Dakota - 57.8%; Iowa - 57.3%; Mississippi - 57.0%; Nebraska - 55.6%; Kentucky - 54.4%; Vermont - 54.2%; Kansas - 53.2%; West Virginia - 52.4%; Maine - 51.3%; Wyoming - 50.8%. 3

Previously, there were 6.9 million MA enrollees in 1999, 5.3 million in 2005 and 11.1 million in 2010, with overall penetration rates of 18% in 1999, 12% in 2005 and 24% in 2010. 4

 

Participating Plans

As of April 2011, CMS had 555 Medicare Advantage plan contracts in place; 110 other prepaid plan contracts including 76 PACE agreements; and 84 Prescription Drug Program contracts. 1 Contracts can cover more than one plan for an organization. There are 2,011 MA plans available in 2011, compared to 2,314 in 2010 and 2,830 in 2009. For 2011, 55% of these plans were local HMOs, 25% were local PPOs, 11% were PFFS plans, 3% were Regional PPOs and 6% were Cost and other plans. 4

Of the 11,087,528 April 2011 enrollees in local HMO, PPO, PFFS and other plans represented by 261 parent organizations, the top five parent organizations had 46.4% of total enrollment and are as follows: 5

  • UnitedHealth Group, Inc. - 1,995,577
  • Humana - 1,396,785
  • Kaiser  - 1,020,400
  • Aetna - 395,138
  • HealthSpring - 332,20

Of the 1,142,707 April 2011 Regional PPO enrollees represented by seven contracting parent organizations, Humana held the largest number of enrollees, with 44.6%. 5 As of April 2011, the top five Medicare Prescription Drug Plan contracts by enrollment represent 56% of total enrollment and are as follows: 5

  • UnitedHealthcare - 4,388,551
  • Humana - 2,322,749
  • Universal American - 1,741,422
  • First Health - 1,043,914
  • WellCare - 943,574

Kaiser Family Foundation found that for 2011 “84 percent of all Medicare beneficiaries will have access to one or more HMO (93 percent of beneficiaries in urban areas and 53 percent of beneficiaries in rural areas)” and  “78 percent of all Medicare beneficiaries will have access to one or more local PPOs (82 percent in urban areas and 62 percent in rural areas).” They found that the “average beneficiary can choose from 10 HMOs, 4 local PPOs, 4 PFFS plans, and 5 regional PPOs in 2011. 6  

 

PDP Benefits

Kaiser Family Foundation found that for 2011, “Fifty‐three percent of all MA‐PDs will offer some coverage in the coverage gap, also known as the Medicare Part D “doughnut hole,” …Thirty percent will cover generics only (no brands) and the remaining 23 percent will cover some brands and generics….In 2011, two‐thirds of all PDPs will offer no coverage in the gap….. Nearly two‐thirds of all regional PPOs have no coverage in the gap, as compared to 46 percent of HMOs and 41 percent of PFFS plans.” 6

 

Premiums

Kaiser Family Foundation found that “In 2011, the average premium, weighted by 2010 enrollment, will be about $43 per month, up from $41 in 2010 – a 5 percent increase – for enrollees in plans available in both years. In contrast, premiums increased by 22 percent between 2009 and 2010 (enrollment weighted)….. The average premium for enrollees of Medicare Advantage Prescription Drug plans was $48 per month in 2010, weighted by enrollment. This reflects a 32% increase in premiums since 2009. Premium increases were higher for PPOs and PFFS plans than for HMOs .” 6  The average 2010 weighted premium for a plan exiting the program at the end of 2010 was $74.98, compared to $40.57 for plans continuing in 2011. 4

Kaiser Family Foundation also found that “the share of enrollees in zero‐premium plans will increase slightly from 49 percent in 2010 to 51 percent in 2011, among plans that will be offered in both years, and is much higher share among HMOs and regional PPOs enrollees (60 and 61 percent, respectively) than PFFS plan enrollees (9 percent). Virtually all Medicare beneficiaries (97 percent) have access to at least one zero premium MA‐PD, similar to previous years.” 6

 

Regions

CMS has designed 26 MA Regions and 34 PDP Regions, which are used for risk-assignment, reporting and other various purposes. Of the 34 PDP regions, 25 consist of single states. Six regions consist of two states. Three regions encompass more than two states. Of the 26 MA regions, 11 consist of single states. Fourteen of the states that are their own regions for PDP purposes have been combined into seven two-state regions for MA purposes. Two of the PDP two-state regions have been combined into a four-state region. The remaining PDP two-state regions and other multi-state regions remain unchanged for MA purposes.7  

 

Star Ratings

CMS now rates Medicare Advantage plans on a scale of one to five stars, according to the following scale:

  • 5 Stars - Excellent performance
  • 4 Stars - Above average performance
  • 3 Stars - Average performance
  • 2 Stars - Below average performance
  • 1 Star - Poor performance

The Star Ratings now impact an MA plan’s payments from CMS. Kaiser Family Foundation conducted a study that found 24% of MA enrollees were covered by contracts that received an overall rating of 4 or more stars; 60%  were covered by contracts that received 3 or 3.5 stars; 7% were covered by contracts that received fewer than 3 stars; and 8% of contracts were not rated by the CMS in 2011. The average overall rating in 2011 is 3.47 stars, increasing from 3.06 stars in 2009. 8

 

Payments to Plans

For 2012 Medicare Advantage Monthly Capitation Rates for Plans by County range from Miami-Dade in Florida ($1,346.58 5 Star / $1,280.90 <= 2.5 Star) to Harrisonburg City in Virginia ($702.55 5 Star / $670.99 <= 2.5 Star) [There are 100 counties located in the territories of PR, GU and VI with lower rates than Harrisonburg City] 9 Kaiser Family Foundation reports that Medicare payments to plans are estimated to total $116 billion in 2010, accounting for 22% of total Medicare spending. 4

 

Utilization

The following utilization rates apply to Medicare HMOs under the Medicare Advantage program (2009 data – published in 2011) as published in the Sanofi-Aventis Public Payer Digest: 10

  • Hospital Inpatient Days Per 1,000 Per Member: 1,571
  • Average Inpatient Length of Stay:  6.0
  • Physician Encounters Per Member Per Year:  9.8
  • Ambulatory Visits Per Member Per Year: 4.0
  • Prescriptions Per Member Per Year  30.0
  • % Generic Filled Prescriptions: 58.5%  

 

Notes

1 Medicare Advantage, Cost, PACE, Demo, and Prescription Drug Plan Contract Report - Monthly Summary Report (Data as of April 2011), CMS

2 MA State/County Penetration Report- April 2011, CMS

3 PDP State/County Penetration Report- April 2011, CMS

4 Medicare Advantage Fact Sheet, Kaiser Family Foundation, September 2010, http://www.kff.org/medicare/upload/2052-14.pdf

5 Medicare Advantage, Cost, PACE, Demo, and Prescription Drug Plan Organizations - Monthly Report by Contract - April 2011, CMS

6 Medicare Advantage 2011 Data Spotlight, Kaiser Family Foundation, http://www.kff.org/medicare/upload/8117.pdf

7 What are the CMS Medicare Part D prescription drug plan regions? Q1Medicare.com http://www.q1medicare.com/q1group/FAQ.php?category_id=1&faq_id=360

8 Kaiser Family Foundation Issue Brief, Quality Ratings of Medicare Advantage Plans, 2011; February 2011, http://www.kff.org/medicare/upload/8151.pdf

9 Medicare Advantage Monthly Capitation Rates for 2012 for All Plans Except PACE Plans, CMS

10  Public Payer Digest, 2010–2011, Managed Care Digest Series, Sanofi-Aventis, http://www.managedcaredigest.com/pdf/PublicPayerDigest2010.pdf