Maybe someone told you that you’ll get better care with Original Medicare vsMedicare Advantage or vice versa. Have you ever wondered if Medicare providers have a preference between Medicare Advantage plans and Original Medicare?
We will look at the pros and cons of Medicare Advantage plans vs. Original Medicare, both from a providers’ perspective and the viewpoint of an enrollee. While one option isn’t necessarily better than the other, understanding the differences will help you determine which Medicare choice is right for you.
What is Medicare Advantage (Part C)
Medicare Part C is also known as Medicare Advantage. It is an alternative way to get your Original Medicare Part A and Part B benefits, while possibly adding additional coverage such as prescription medications, dental care, or other services. Some Medicare Advantage plans may even include extra benefits like free membership or discounted rates for local gyms.
Private Medicare-approved insurance companies offer Medicare Advantage plans, which vary in terms of cost and coverage. However, all are required to provide the exact same coverage you would receive through Original Medicare Part A and Part B. And as Medicare Advantage are Medicare-approved plans from a private company, Medicare Advantage can be considered a hybrid between private insurance and Medicare.
There are different types of Medicare Advantage plans. Keep in mind that not all plan types are available in every area:
Health Maintenance Organizations (HMOs): If you enroll in an HMO, only providers within the network are usually covered. You generally will need to select a primary care physician (PCP) who will oversee your care. If you need to see a specialist within the network, it will typically require a referral from your PCP. Most of these plans cover prescription medications.
Preferred Provider Organizations (PPOs): If you enroll in a PPO, you typically will be fully covered when you see providers within the network. You may also get coverage for services from providers outside the network, usually at a higher cost. You do not need to select a PCP with this plan type, and in most cases, you will not need referrals to see other providers. Most of these plans offer prescription drug coverage.
Private Fee-for-Service (PFFS) plans: These plans allow you to go to any provider or hospital that accepts your plan. Some PPFS plans may feature a network of providers, which means you may have to pay more for services from providers outside the network. Some of these plans offer prescription drug coverage.
Special Needs plans (SNPs): SNPs are designed for people with specific conditions or healthcare needs. They are also available to some individuals with limited incomes. All these plans generally include prescription drug coverage. Networks usually include providers that specialize in the diseases or conditions affecting members. Some will cover services from providers outside the network while others will not.
Medicare Advantage plans offer the protections provided by the Affordable Care Act. This means that you can get coverage regardless of any preexisting conditions you might have or your health history.
What is Original Medicare (Part A and Part B)
Original Medicare consists only of Part A and Part B. Part A is hospital insurance that covers inpatient visits to hospitals and nursing homes and some home health services. Part B is medical insurance that covers outpatient visits, preventative care, some home health services, and certain medical devices.
The Centers for Medicare & Medicaid Services (CMS) is the federal agency that oversees Medicare. Funding for the program comes from a portion of payroll taxes paid by employers and employees. Additional funding comes from monthly premiums enrollees pay to keep their coverage.
You typically sign up for Part B when you are first eligible for Medicare, which is usually when you turn 65. If you don’t enroll, you may have a late enrollment penalty, which you will pay as long as you have Part B. You may sign up for a Medicare Advantage plan once you are eligible for Medicare, and there are no penalties for enrolling in a plan after the age of 65.
You will need to pay a monthly premium for your Part B coverage, which is determined by CMS each year and can be affected by your annual income. You may also have a monthly premium for Part A, depending on how long you worked and contributed to Medicare taxes. Most people do not pay a premium for Medicare Part A.
For those that wish to lower their out-of-pocket costs further and on Original Medicare, Medicare Supplement Insurance plans known as Medigap are also available. These plans are offered by private health insurance companies and cover some of your out-of-pocket costs, such as deductibles, copayments, and coinsurance.
Medicare Advantage vs. Original Medicare
There are many key differences between Medicare Advantage plans and Original Medicare:
Prescription Drug Coverage
Original Medicare does not include coverage for your prescription medications. To have prescription drug coverage, you will need to enroll in a Medicare Part D prescription drug plan separately. Most Medicare Advantage plans do include prescription drug coverage, although not all offer that benefit.
Additional Services Covered
While a Medicare Advantage plan may include coverage for additional services like dental care, hearing services, or even gym membership, Original Medicare does not offer that option. If you have Original Medicare and want these additional coverage, you will need to enroll in additional plans that cover those specific services.
Provider Choice and Referrals
If you have Original Medicare, you can see any doctor that accepts Medicare assignment, which includes most providers nationwide. Medicare does not require referrals to see specialists and there is no network of providers you must use to ensure coverage.
Most Medicare Advantage plans do feature a network, and some require a referral from a primary care provider (PCP) to see another provider within the network. While this can slow down the process of getting the care you need, it also ensures there is a primary provider coordinating your care, which may lead to better outcomes. Some plans may have relatively small networks, which limit the specific providers you can see.
Cost for Hospitalization
Under Medicare Advantage, beneficiaries may have to pay set copays rather than a 20% coinsurance amount for doctor visits and Part B services. Thus, most Medicare Advantage usually have lower out-of-pocket costs than Original Medicare. It is important to review any Medicare Advantage plan thoroughly before enrolling to ensure you have sufficient coverage for hospital stays if they should arise. Some people may find that enrolling in a Medigap plan during the guaranteed-issue rights period might save money in the long run.
Healthcare Budgeting
There is a difference in how you will need to budget for Medicare Advantage plans vs. Original Medicare.
Medicare Advantage plans typically have lower monthly premiums, since all your medical care is typically covered under a single umbrella. This means you may pay less up front for your healthcare, although you could pay more for services when you need them. For example, you may pay copayments to multiple providers if you need to see specialists or have additional tests done.
With Original Medicare, you pay all your monthly premiums and typically less when you require medical services. This can make it easier to budget for your healthcare costs if you see providers frequently for ongoing health issues or chronic conditions.
Coverage Options
Unlike Original Medicare, which offers standardized coverage, Medicare Advantage plans can vary in what they cover and how much they cost. You can also choose between plan types like Health Maintenance Organization (HMO), Preferred Provider Organization (PPO), Private Fee-for-Service (PFFS), and Special Needs Plans (SNP). This allows you to shop around so you can find the plan that meets your healthcare needs and budget best.
Plan Changes
Medicare Advantage plans are subject to change every year. Even if your doctor is currently in the network of your plan, that could change the following year. Benefits can also change, since they are up to the discretion of the insurance company offering the plan. You may also find the new year brings changes to the cost-sharing structure, which could affect how much you pay for your healthcare needs. It is essential to review your plan every year to assess any potential changes before they become unpleasant surprises.
Out-of-Pocket Costs
Medicare Advantage plans have out out-of-pocket maximum, which is the total amount you will have to pay for your medical services throughout the year. Once that maximum amount is met, your medical care is generally fully covered. Original Medicare does not have an out-of-pocket limit, although a Medigap plan may offer limits that are in line or even less than a Medicare Advantage plan.
Despite these advantages, there are typically higher copayments and coinsurance with Medicare Advantage plans. Depending on the specific level of care you need throughout the year, you may end up paying more for a Medicare Advantage plan throughout the year. However, others may save a significant amount by enrolling in one of these plans instead of staying with Original Medicare. It depends on the specific plan you choose and the level of care you may require during the year.
Coverage Away from Home
With Original Medicare, you may see providers away from home that accept Medicare. Medicare Advantage plans are regional, which means your coverage doesn’t extend to other geographic areas, except in the case of an emergency. This may be a concern for people who travel frequently or spend a portion of their year in a different location.
Provider Differences Between Medicare Advantage and Original Medicare
Medicare Advantage plans are offered by private insurance companies that contract with Medicare to provide at least the same benefits as Original Medicare Part A and Part B. Most plans also include prescription drug coverage, and many plans may include other extra benefits, like routine dental care.
You must be enrolled in Medicare Part B to enroll and remain in a Medicare Advantage plan. You will also need to keep paying your Part B premium. Your Medicare Advantage plan may have an additional monthly premium on top of the Part B monthly premium, but many Medicare Advantage may not charge a monthly premium.
Some providers belong to Medicare Advantage plan networks. It is important to check that your doctor is included in the network of any Medicare Advantage plan you consider, unless you are comfortable switching providers. Some plans also require you to name a primary care doctor, who oversees your care and refers you to other specialists as needed. This coordinated care can lead to better outcomes for some patients. It also restricts the specific doctors you can see to those that are in your network.
Unlike Original Medicare, Medicare Advantage plans have regional service areas. Many plans have networks of Medicare providers who are contracted with the Medicare Advantage plan and have an active, ongoing business relationship with the plan and other Medicare providers in the network.
Providers that are part of a Medicare Advantage plan’s network agree to the plan’s reimbursem*nt schedules and administrative rules. However, the cost for Medicare Advantage plans is not standardized, which means your costs can vary between plan types, provider networks, and the area where you live.
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Medicare Advantage Plans from a Doctor’s Viewpoint
Doctors in the Medicare Advantage plan networks may see the benefits of these plans for both their practices and their patients. However, there are also some challenges doctors may encounter when working with Medicare Advantage plans.
Doctor Challenges
While many physicians work within the Medicare Advantage networks with few problems, the plans do not come without issues. One of the primary challenges doctors face is referral and pre-authorization requirements that may impede a patient’s needed medical care. Taking the extra steps in some cases may slow down the process when a patient needs tests or treatments sooner rather than later.
While referrals and pre-authorizations can improve the coordination of patient care, they also put some decisions in the hands of the insurance company, rather than the patient’s provider. In some cases, your doctor may not agree with your insurance provider’s decision to approve a less expensive treatment before paying for a more expensive one that your doctor may recommend. Providers in Medicare Advantage networks may also have to take time away from patients to spend it on pre-authorization paperwork.
Network Limitations and Referral Requirements
Many Medicare Advantage plans feature a network of providers and some of those have provider restrictions within the network that determine whether you will be covered for your services. You designate a doctor to serve as your primary care provider (PCP), who will oversee your care and refer you to specialists as needed. This system ensures your care is coordinated by a single provider. However, it can also limit the specialists you can see if the network you belong to does not include many providers in a specific specialty.
In addition to the referral, your provider may need to get pre-authorization from your insurance company before a treatment or procedure will be covered. This requires time by your doctor’s office – time that could otherwise be used seeing patients. It can also slow down the treatment process, which may be detrimental in the care of some patients.
Doctor Acceptance Between Medicare Advantage vs. Original Medicare
If you decide to enroll in a Medicare Advantage plan, you will generally need to find providers who are in the plan’s network. People who enroll in Original Medicare will also need to find doctors that accept Medicare assignment.
Providers can decide whether to participate in Original Medicare or in a Medicare Advantage plan. Some doctors may not agree with the terms an insurance company offers and choose not to participate in their plan. Providers can also decide not to accept Original Medicare, although the percentage of providers opting out of this program is much smaller.
To determine whether your provider accepts Medicare or your Medicare Advantage plan, you can:
- Contact your Medicare Advantage plan by phone or check the website to see a list of doctors that accept that plan.
- Call your doctor’s office directly and ask if they participate in the Medicare Advantage plan you choose.
- Use Medicare’s online Find Doctors Tool to see which doctors in your area accept Medicare assignment.
Opting-Out or Limiting Participation
Doctors have three relationship options with Original Medicare:
- Participating provider
- Non-participating provider
- Opt-out provider
If a doctor is a participating provider, they agree to always accept Medicare assignment. This means that in addition to accepting Medicare insurance, the doctor agrees to charge the Medicare-approved amount for services rendered. If you work with a participating provider, your doctor’s office will handle all billing paperwork and you will generally be responsible for 20% of the cost of the service you receive, while Medicare pays 80% (once your Part B deductible is met).
Non-participating providers accept Medicare insurance but not assignment. This allows them to charge up to 15% more than the Medicare-approved amount for services. The additional amount is called the limiting charge. If you go to a non-participating provider, you may have to pay the full amount for your service and file a claim directly with Medicare for reimbursem*nt of the covered portion of the cost.
Opt-out providers do not work with Medicare and Medicare will not pay for any coverage for services provided by an opt-out doctor unless it is an emergency. If you work with an opt-out provider, you will pay out-of-pocket for all services rendered and you will not receive reimbursem*nt from Medicare. Opt-out providers can also charge whatever fee they choose for services rendered.
If you have a Medicare Advantage plan and work with a doctor within the network, you will pay your copayment for services and your plan will pay the rest in most cases. However, it is important to understand exactly how your plan coverage works to know how much you will pay for medical services.
Reimbursem*nt Rates and Administrative Tasks
Medicare reimbursem*nt is done directly with your doctor’s office if they are a participating provider. Your doctor files the paperwork and receives reimbursem*nt directly from Medicare. Providers work on a fee-for-service basis, meaning they get a specified amount for each service provided. Reimbursem*nt rates are set by CMS and are usually updated each year.
In most cases, your provider will also handle reimbursem*nts directly from a Medicare Advantage plan as well. If your insurance provider rejects a claim for any reason, you may be responsible for paying your doctor’s office directly for the services you received.
While Medicare Advantage claims might involve less paperwork, there is also the time for referrals and pre-authorizations that must be accounted for with these plans.
Ratings and Quality of Medicare Advantage Plans
When you compare Medicare Advantage plans in your area, one place to start is with the Medicare Star Rating System. Medicare uses this tool to determine how well different Medicare Advantage plans perform in these five categories:
- General Health – includes screenings, vaccines, and tests
- Chronic Conditions – how effectively they are managed
- Communication – how plans respond and care for participants
- Issues – complaints, reported problems, and participants leaving the plan
- Customer Service – how much support is provided for managing your plan
Ratings go from one star to five, with five stars indicating the highest rated plans. Each fall, Medicare releases new star ratings, so you can get the most up-to-date information about plans you might be interested in.
Pros and Cons of Medicare Advantage Plans
When you are making choices about your Medicare coverage, it is important to weigh the pros and cons of Medicare Advantage plans. While they might not be the best option for everyone, they can be cost-effective for the right person. Some of the advantages of Medicare Advantage plans to you may include:
- More benefits than Original Medicare provided under a single coverage umbrella
- Prescription drug coverage often included with your plan
- May have lower monthly premiums than Original Medicare with Medicare Part D in most cases
- Copayments with Medicare Advantage might be lower than coinsurance with Medicare
- Ability to coordinate your care among your healthcare providers
While there are many benefits Medicare Advantage plans may offer for you, there may be some drawbacks as well:
- Networks may limit the providers you can work with
- Referrals and pre-authorizations may slow down the healthcare process for some
- Specific service areas may prohibit you from seeking care away from home, except for emergency care
Only you can decide whether a Medicare Advantage plan will meet your needs best.
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