Medicare Advantage Benefit Design: What Does It Provide, What Doesn't It Provide, and Should Standards Apply?

This AARP Public Policy Institute research report by Marsha Gold and Maria Cupples Hudson of Mathematica Policy Research analyzes changes in Medicare Advantage (MA) benefit design in 2008 and 2009. It shows that MA plans have taken advantage of the flexibility afforded them under the Medicare Modernization Act of 2003 to modify in important ways the structure of traditional Medicare benefits, the cost sharing that applies to them, and their scope.

While MA plans must cover mandated Medicare Part A and Part B benefits, they have the flexibility to modify cost sharing and other benefit features if the results are at least actuarially equivalent. Most plans simplify Medicare’s benefit structure for Part A and Part B benefits, with a shift toward copayments and away from deductibles and coinsurance. Newer MA options tend to offer less than traditional HMOs, though benefits in HMOs vary. Policymakers may want to consider whether greater standardization in the MA program would be desirable. Certain incremental changes could be very valuable to limit the financial exposure of Medicare beneficiaries who are enrolled in the program and make it easier for beneficiaries to anticipate coverage and compare benefits. (38 pages)