Medicare Advantage OverviewMedicare Advantage Overview

Diane Rowland, Sc.D.Diane Rowland, Sc.D.

Executive Vice PresidentExecutive Vice President

Kaiser Family FoundationKaiser Family Foundation

Alliance for Health ReformAlliance for Health Reform

July 16, 2007July 16, 2007

What is Medicare Advantage?What is Medicare Advantage?

Health plans offered by private insurers that receive payments from Medicare to provide Medicare-covered benefits to enrollees

• Medicare pays each plan a per capita payment for each enrollee• Plans contract with the government for one year• Beneficiaries sign up during annual enrollment period

Medicare HMOs have been an option since 1982• Originally plans were paid 95% of traditional Medicare costs, with goals

of achieving savings for Medicare and improving management of care

BBA 97 – created Medicare+Choice • Authorized new types of plans (Private Fee-for-Service plans, local

PPOs)

MMA 03- renamed Medicare+Choice Medicare Advantage • Authorized new plans (Special Needs Plans, Regional PPOs, Medicare

MSAs)

Medicare Advantage enrollees • Generally pay the Part B premium• Sometimes pay a supplemental premium for additional benefits• Typically receive Part D drug coverage

Exhibit 1

407

343

253 240285 300

459512

602

1999 2000 2001 2002 2003 2004 2005 2006 2007

Note: Includes local HMOs, PSOs, and PPOs, regional PPOs, PFFS plans, Cost contracts, Demonstrations, HCPP, and PACE contracts. Source: Mathematica Policy Research, Inc. “Tracking Medicare Health and Prescription Drug Plans Monthly Report” December 1999-2006. CMS Medicare Advantage, Cost, PACE, Demo, and Prescription Drug Plan Contract Report, Monthly Summary Report, June 2007.

The number of Medicare Advantage contracts The number of Medicare Advantage contracts has doubled since 2004 has doubled since 2004

Exhibit 2

16%

14%

13%

10%

47%

Medicare Advantage enrollment is concentrated Medicare Advantage enrollment is concentrated among a small number of organizationsamong a small number of organizations

Exhibit 3

4.6 million beneficiaries account for more than half of

total Medicare Advantage enrollment

NOTE: All Other Medicare Advantage Plans includes plans with enrollment less than 230,000 beneficiaries. Total for Blue Cross/Blue Shield affiliates provided by Blue Cross/Blue Shield. Numbers rounded. Data as of May 15, 2007. SOURCE: Centers for Medicare and Medicaid Services (CMS), June 2007 Monthly Summary.

Total Medicare Advantage Enrollment= 8.7 million

(1.4 million enrollees)

(1.2 million)

(1.1 million)

(0.9 million)

UnitedHealth Care

Blue Cross/Blue Shield affiliates

Humana Inc.

Kaiser Permanente

All Others*

The majority of Medicare Advantage The majority of Medicare Advantage enrollees are in Medicare HMOsenrollees are in Medicare HMOs

Cost Plans 4%

MSA<1%

Other Demo3%

Regional PPO2%

Private Fee-for-Service18%

Local HMO/PPO71%

Notes: Local HMO/PPO also includes a small number enrolled in provider sponsored organizations. Numbers do not sum to 100 percent due to rounding.SOURCE: Centers for Medicare and Medicaid Services, Medicare Advantage, Cost, PACE, Demo and Prescription Drug Plan Contract Report, Monthly Summary Report, June 2007.

2007 Medicare Advantage Enrollment = 8.7 million

Exhibit 4

Characteristics of Medicare Advantage enrollees and beneficiaries in traditional Medicare

SOURCE: Kaiser Family Foundation analysis of the 2005 Medicare Current Beneficiary Survey (MCBS).

Exhibit 5

27%

17%

29%

48%

4%

7%

24%

50%

Percent Livingin Rural Areas

Percent UnderAge 65 withPermanentDisabilities

PercentReportingFair/Poor

Health

Percent withIncome

<$20,000

Medicare Advantage

Traditional Medicare

More than one in four Medicare beneficiaries More than one in four Medicare beneficiaries are projected to be in a Medicare Advantage are projected to be in a Medicare Advantage

plan by 2016plan by 2016

0%

5%

10%

15%

20%

25%

30%Projected

SOURCE: Centers for Medicare and Medicaid Services, 2007 Medicare Trustees Report Table IV.B6.

Actual

27%

19%

Exhibit 6

Percent of Total Medicare Population: