What is a Medicare Advantage Plan?
These plans are offered by private insurance companies and are approved by Medicare. At first glance, Medicare Advantage might seem like a great option because it often includes additional benefits not offered by Original Medicare, such as vision, dental, and hearing coverage. However, these are low cost supplemental services designed to make a substandard product look amazing.
Now there are a few circumstances where these are useful.
- Retirees on a limited or fixed income
- Individuals who do not travel
- People with severe chronic illnesses or special medical needs
If you do not fall into these categories, you should not get a Medicare Advantage plan. I’ve got a laundry list of issues with these plans. But before I go there, let me explain how they work.
Who manages and sells Advantage Plans?
Medicare sends these insurance companies a fixed dollar amount for each person they enroll. They are legally required to cover all services Medicare does. But how they execute those requirements determines how much profit they make. The less care they provide, the more profit they make.
Their most effective cost reduction tool is limiting access to doctors and hospitals. Even though 98% of medical providers take original Medicare, the best Medicare Advantage plan will cut that in half. And if you selected one of the cheaper or $0 premium plans, you might be limited to care in just a few counties.
Honestly, it’s closer to the latter than the former. The process to build a charge master is not completely random. These facilities use some analysis. But in the end, there is no methodology, law, or governing body that regulates or standardizes how these organizations create prices.
Not only is the pricing process inconsistent, there is no transparency for the consumer. How much would you pay for a gallon of milk, someone to landscape your lawn, or for a car? I bet you have a price range in your head. Now how much would you pay for assisted transportation to your primary care doctor, for a nurse to visit your home for three hours, or for an assisted living facility for one year? And if you don’t know the answer, surely your insurance company will know. Wrong! Call the customer service hotline and ask for an in network price schedule. Better yet, call the healthcare facility and request a complete and unredacted charge master. Let me know how that works out.
Do Advantage Plans cover your non-Medicare Costs?
In 2019, an investigation by the department’s Inspector General revealed that the leading 15 Medicare Advantage plans rejected 13 percent of claims that were in compliance with Medicare regulations. These plans also refused to pay for 18 percent of claims that conformed to Medicare’s coverage and billing requirements. When these Medicare Advantage plans do approve claims, the amount they pay to providers is significantly lower than what is typically reimbursed under traditional Medicare.
To summarize that, the biggest Medicare Advantage plans won’t pay for the care you are legally entitled to. And they don’t pay doctors the full amount they are entitled to… Classy.
Is the broker really working in your best interest?
Then there is the broker’s dilemma. Insurance brokers are not fiduciaries (although we think they should be). Legally they are only required to sell you an “appropriate” product. It doesn’t have to be the best and/or lowest cost. And if you didn’t figure this out already, insurance companies pay more commissions for Medicare Advantage plans. Money is a powerful incentive to do “good enough”.
Can you trust your Medicare broker will do the right thing for you?
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