Some Medicare Advantage plans are responding to continued payment reductions under the Affordable Care Act by decreasing the number of plans and options available in 2014.
Medicare's annual beneficiary enrollment period runs from Oct. 15 to Dec. 7, and the total number of the increasingly popular private Medicare plans will slip 5.3 percent from 2,664 in 2013 to 2,522 for next year, according to Avalere Health, based on an analysis of the Centers for Medicare & Medicaid Services Landscape Files for 2014.
The decrease in 2014 won't occur in just certain areas but in a majority of counties across the country, with 80 percent of counties in the South and Midwest and slightly more than half in the Northeast and West seeing fewer Medicare Advantage options. Plans are pulling back in rural markets.
"The multitude of payment changes for Medicare Advantage plans under the ACA are taking root and starting to broadly impact the number and types of plans available in the market," said Matt Eyles, Avalere Health executive vice president, in a news release.
Besides the phase-in of payment cuts under ACA, there are revisions to the CMS risk adjustment model, new medical loss ratio requirements for Medicare Advantage plans and the application of the new health insurer fee, he said.
CMS is paying Medicare Advantage plans substantially less than before ACA, "when average plan payments were 114 percent of Medicare fee-for-service overall and now is closer to 103 percent and getting down to goal of parity," said Jonathan Blum, acting principal deputy administrator and director of the Center for Medicare, at a recent conference.
And an analysis from HealthPocket found that many Medicare Advantage plans that also included a Part D prescription drug benefit in 2014 have much lower maximum out-of-pocket caps than the current $6,700 limit for such plans. Some even had a $3,400 or lower out-of-pocket cap and a zero premium.
With such favorable options, trends reflect that Medicare Advantage plans with Part D are attracting increasingly more seniors over traditional Medicare with a supplemental plan and a Part D plan, HealthPocket noted.
Medicare Advantage premiums in general are also in line with those of last year.
However, the plans may be inexpensive to get into but may be costly if the enrolling senior needs medical services that are not covered.
Quality scores are important in decision-making, said Steve Zalenick, executive director for consumer strategy and development at HealthPocket.
But he cautioned in a news release that "Medicare enrollees need to factor in whether their doctors and hospitals are in a plan's network, whether their current medications are covered, and the amount charged for specific medical services they may need in the coming year."
Supporting that trend, Avalere's analysis found that to accommodate financial pressures, plans are relying more on highly managed health maintenance organizations (HMOs), which will increase by 2.6 percent, while preferred provider organization (PPO) offerings will drop 16.6 percent in 2014.