What Are the Differences Between Medicare Advantage Plans in Different States?

Medicare Advantage plans are private health insurance plans paid by the federal government to provide benefits covered by Medicare as an alternative to “traditional” or “original” Medicare. These plans can vary greatly depending on the state you live in. Medigap plans are standardized in most states, meaning they offer the same benefits, with the exceptions of Wisconsin, Minnesota and Massachusetts. In these states, plans may have options that differ from Medigap plans in other states.

Medicare pays Medicare Advantage plans a capitalized amount (per member) to provide all Part A and B benefits. In addition, Medicare makes a separate payment to plans to provide prescription drug benefits under Medicare Part D, just as it does for separate prescription drug plans (PDPs). Payments to plans are adjusted based on members' health status and other factors. People with traditional Medicare have access to any doctor or hospital that accepts Medicare, anywhere in the United States.

Benchmarks are set in law as a percentage of traditional Medicare spending in a given county, ranging from 115 to 95 percent. If the offer is lower than the benchmark, the plan and Medicare divide the difference between the offer and the benchmark; the plan's share is known as “reimbursement”, which is designed to be used to provide supplemental benefits to members. In Washington State, if you're enrolled in a Medicare Advantage plan, you can't buy a standalone Part D plan. Doing so will automatically cancel your enrollment from your Medicare Advantage plan and you will enroll in Original Medicare.

In two states (ND and SD), most private plan enrollments are in cost plans, which Medicare pays based on the “reasonable cost” of providing services and, unlike Medicare Advantage plans, do not assume financial risks if federal payments do not cover their costs. Regional PPOs were established to give rural beneficiaries greater access to Medicare Advantage plans, including the additional benefits that plans typically cover, and cover entire state or multi-state regions. SNPs restrict enrollment to specific types of beneficiaries with significant or relatively specialized care needs, or who qualify because they are eligible for both Medicare and Medicaid. It has long been worrying that such denials of care through prior authorization, or denials of payment after care was provided, were more widespread than Medicare Advantage plans claim. As Medicare Advantage plans are expected to soon become the dominant form of Medicare coverage, it will be important to evaluate beneficiary experiences and the long-term sustainability of the program to ensure that Medicare Advantage plans provide effective, efficient and equitable care. Unfortunately, access to reliable information on plan networks is often not easy for members or their family members to obtain. Publication enrollment counts for companies operating in the Medicare Advantage marketplace, such as company financial statements, may differ from KFF estimates due to the inclusion or exclusion of certain types of plans, such as SNPs or employer plans. First, higher costs relative to traditional Medicare will test federal spending and the creditworthiness of the Hospital Insurance trust fund (Part A).

It will also be important to monitor how well beneficiaries are being served in both Medicare Advantage and traditional Medicare, in terms of costs, benefits, quality of care, patient outcomes, and access to providers, with a focus on people with the greatest needs. When you sign up for a Medigap plan, you'll notice that some plans cover overage charges and others don't. This amount is known as a “rebate” and is equivalent to savings shared between the federal government and plans.

Elise Woehl
Elise Woehl

Subtly charming student. Award-winning twitter practitioner. Incurable coffee scholar. Friendly thinker.