What Are Medicare Managed Care Plans?

by | Aug 4, 2024 | Medicare Part B, Medicare Part D, Prescription Drugs | 0 comments

What Are Managed Care Plans in Medicare

Medicare managed care plans, also known as Medicare Advantage (Part C) plans, are a private insurance alternative to Original Medicare.

What Are Medicare Managed Care Plans?

Unlike Original Medicare, Medicare Advantage plans are offered by private insurance companies and provide all the benefits of Original Medicare (Part A and Part B) in a single bundled plan.

In addition to all benefits of Original Medicare, most Medicare Advantage plans include: 

Medicare Advantage is popular: Approximately 31 million people are enrolled in Medicare Advantage plans, attracted by the broad coverage and low monthly enrollment costs. But does that mean they are as good as they sound?

In some cases, they can be a fantastic solution. In other cases, Medicare beneficiaries may be much better off electing non-managed care alternatives such as Medicare supplement (Medigap) insurance, or the lesser-known but powerful Medi-Share 65+ health sharing option.

Let’s take a closer look at Medicare Advantage managed care plans, how they work, and their advantages and disadvantages, so you can be confident in making an informed decision about your own Medicare strategy.

Medicare Managed Care Plan Basics

Medicare Advantage plans operate under a managed care model.

This means that the insurance company manages your care by creating a network of doctors, hospitals, and other healthcare providers. The goal is to provide coordinated care that can help improve health outcomes and control costs.

Medicare Advantage plans may be a good option for:

  1. Generally healthy individuals who don’t use many healthcare services.
  2. Those who want extra perks like dental, vision, and hearing coverage.
  3. People who prefer the convenience of having all their Medicare benefits in one plan.
  4. Those who are comfortable with a more limited network of healthcare providers.
  5. Anyone looking for a lower monthly cost than a Medicare supplement plan.

There are some distinct advantages and disadvantages to these types of Medicare managed care plans. This article will explore both in more detail. But it’s also a good idea to connect with an expert to explain the nuances of Medicare plans, and help you find the best option for your unique situation.

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Medicare Managed Care Plan Advantages

The main benefits of choosing a Medicare Advantage managed care plan plan over Original Medicare include:

  • Reduced risk. Original Medicare helps pay for hospital costs, physician’s charges, outpatient, lab and imagery services and other costs. But your potential cost exposure under Original Medicare alone is still theoretically unlimited. Those 20% coinsurance costs under Medicare Part B can add up fast – especially if you need surgery or an extensive trauma stay or significant cancer treatment. Medicare Advantage puts a cap on your out-of-pocket costs in any given year, which massively reduces your risk. Plans vary, but as of 2024, the maximum out-of-pocket limit (MOOP) for Medicare Advantage plans is $8,850. Still no picnic, but it’s much, much better than going with Original Medicare alone. Since there are many plans available with zero-premium, it’s a no-brainer. Some Medigap plans can limit your out-of-pocket costs even more––to as low as $240, the Medicare Part B deductible as of 2024, in the case of Medigap plans G and N. But Medigap plans have a monthly premium.
  • Supplemental Benefits. Most Medicare Advantage plans provide coverage for services that Original Medicare does not, such as dental, vision, hearing, and wellness programs like gym memberships. This can help reduce out-of-pocket costs for these services. Some Medicare Advantage plans offer supplemental benefits like transportation to medical appointments, over-the-counter drug allowances, meal delivery after hospitalization, and more.
  • Prescription Drug Coverage. The majority of Medicare Advantage plans include prescription drug coverage (Part D), eliminating the need to enroll in a separate Part D plan as required with Original Medicare.
  • Cost Savings. Many Medicare Advantage plans have $0 premiums beyond the Part B premium. They also cap annual out-of-pocket spending, protecting against high costs if major medical care is needed.
  • Coordinated Care. Medicare Advantage plans operate within provider networks, which can facilitate more coordinated care among doctors, specialists, hospitals, etc.
  • Convenience. With Medicare Advantage, medical and drug coverage are combined into one plan, simplifying insurance rather than having separate parts to manage.

Overall, Medicare Advantage can provide more comprehensive coverage and better cost protection if you don’t mind using the plan’s provider network.

Disadvantages of Medicare Advantage Plans

While there are many benefits to opting for Medicare Advantage over Original Medicare, there are several disadvantages also.

Here are a few you should be aware of:

1. Restrictive Networks

Restrictive networks in Medicare Advantage plans can significantly impact your healthcare options in several ways:

  • Limited Choice of Providers. Medicare Advantage plans typically have a network of doctors, hospitals, and other healthcare providers that you must use to get the lowest costs. If your preferred healthcare providers are not in the plan’s network, you may need to switch doctors or pay higher out-of-pocket costs to see out-of-network providers.
  • Higher Costs for Out-of-Network Care. If you receive care from providers outside the plan’s network, you may face higher costs or no coverage at all, except in emergencies. This can be particularly challenging if you need specialized care that is not available within the network or if you live in a rural area with limited provider options.
  • Potential Delays in Care. Some Medicare Advantage plans require prior authorization for certain services, treatments, or medications. This means you need approval from the plan before receiving the service. If the plan denies the authorization, you may have to pay out of pocket or forgo the service altogether, leading to potential delays in receiving necessary care.
  • Impact on Rural Healthcare. If you are in a rural area,restrictive networks can be particularly problematic. Rural areas often have fewer healthcare providers, and those providers may not be included in the Medicare Advantage plan’s network. This can limit access to care and force you to travel long distances to see in-network providers].
  • Specialty Care Access. Some specialties may have more limited networks, making it harder for you to find in-network specialists. This can affect your ability to receive timely and appropriate specialty care.

2. Prior Authorization Requirements

Many plans require prior authorization for certain services, treatments, or medications.

This means you need approval from the plan before receiving the service. If the plan denies the authorization, you may have to pay out of pocket or forgo the service altogether. This can delay or prevent access to necessary care.

3. High Out-of-Pocket Costs

While Medicare Advantage plans often have low or or even zero premiums, the maximum out-of-pocket cost of $8,850 as of 2024 can be daunting.

That means that while Medicare Advantage plans are great at keeping costs down for relatively healthy people who rarely need to see a doctor, you may want to look at other alternatives, including:

  • Medigap Plan G or N, which limits your out-of-pocket costs under Original Medicare to as low as $240 per year;
  • Medi-Share 65+, a non-insurance health sharing alternative that limits your Original Medicare out-of-pocket costs to $500 per household per year.

For free, personalized help deciding which approach is best for you, you can make a no-obligation appointment with a MediGap Advisors Personal Benefits Manager.

4. Coverage Limitations

Plans may not cover care outside of their service area, except in emergencies.

This can be a major drawback if you spend part of the year in a different location or travel frequently. Additionally, some plans may not cover certain services or treatments that are covered under Original Medicare.

5. Plan Changes

Medicare Advantage plans can change their benefits, provider networks, and costs annually.

This means that a plan that works well for you one year might not be the same the next year. You need to review your plan and other available options during the annual enrollment period to ensure it still meets your needs.

6. Denial of Necessary Care

There have been reports of plans denying coverage for medically necessary care, which can lead to delays in treatment or out-of-pocket expenses for services that should be covered.

This can be particularly harmful for those who cannot afford to pay for services directly when they need them.

7. Limited Access to Medigap

If you choose a Medicare Advantage plan, you cannot purchase a Medigap (Plan G) policy.

Medigap policies can help cover out-of-pocket costs that Original Medicare does not, such as copayments, coinsurance, and deductibles. Without Medigap, you may face higher out-of-pocket expenses than you expected.

While Medicare Advantage plans can offer additional benefits and lower premiums, they come with several potential downsides, including restrictive networks, prior authorization requirements, high out-of-pocket costs, coverage limitations, plan changes, denial of necessary care, and limited access to Medigap.

It’s essential to carefully consider these factors and compare plans to determine the best option for your healthcare needs.

Learn More: Learn Your Medigap ABCs – Comparing The Top Medicare Supplement Insurance Plans in 2024

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Potential Alternatives

Original Medicare doesn’t cover everything and seniors may still be faced with high deductibles, out-of-pocket costs, co-pays, and co-insurance.

Adding a Medigap plan can help, but the costs and coverage for these plans can vary quite a bit depending on your situation.

An alternative to traditional insurance with no in-network restrictions is Medi-Share 65+.

Medi-Share 65+ is a health sharing plan that allows you to use any doctor or facility that takes Medicare.

Members share out-of-pocket costs for hospitalizations, durable medical equipment, office visits, and skilled nursing facility care.

Although it is not insurance, Medi-Share 65+ can be an affordable alternative to Medigap and Medicare Advantage.

Learn More: Does Medi-Share 65+ Pay When Traveling Outside the U.S?

Conclusion

Whether or not managed care plans are a good deal or not depends on your specific situation.

Medicare Advantage plans can offer some good benefits, such as:

  • Potentially lower out-of-pocket costs compared to Original Medicare
  • Simplified coverage with all benefits bundled into one plan
  • Comprehensive coverage and additional services
  • An annual limit on out-of-pocket expenses for covered services.

If you have a specific medical condition, or other health considerations, you may even be eligible for a Medicare Advantage Special Needs Plan.

Managed care plans have some downsides, as well: you may have fewer choices of doctors and hospitals due to the limited networks of providers. And if you require frequent or specialized care, you might end up paying more overall with a Medicare Advantage plan compared to Medigap or Medi-Share 65+ plans.

Many plans limit coverage to a specific service area, which can be problematic for those who travel frequently or have multiple residences. And some plans may require pre-approval for certain treatments or services, which can delay care.

Plans can change their benefits, costs, and provider networks each year, which may require you to switch plans or providers. There is a potential for unexpected out-of-pocket costs. And if you decide to switch back to Original Medicare after being on a Medicare Advantage plan for more than 12 months, you may face challenges in obtaining Medigap coverage.

So while managed care plans can offer comprehensive coverage and additional benefits for some people, they’re not the best choice for everyone.

It’s crucial to carefully consider your health needs, budget, and preferences when deciding which plan is right for you. Contact a Personal Benefits Manager to help you make an informed decision based on your specific circumstances. They’ll walk you through all your options, and help you get the best deal!

For Further Reading: How to Get Out of Medicare Advantage Nightmares|Can I Switch to Medigap with Original Medicare?|10 Medicare Mistakes to Avoid When Choosing a Plan

Tom Lockwood is a Personal Benefits Manager at MediGap Advisors. Tom has a passion for bringing clarity to those confused about Medicare. He is an authority on Medicare, Medicare supplement plans, Medicare Advantage plans, and Part D prescription drug plans. Read more about Tom on his Bio page.