Overview of Medicare Advantage Plans

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Medicare Advantage (MA) is also known as Medicare Part C. An MA plan is an alternative to Original fee-for-service Medicare. MA plans are sponsored by Medicare, which pays private insurance companies to provide health services to beneficiaries who enroll in these plans.

In order to join an MA plan, you must be enrolled in both Medicare Part A and Part B, and you must continue to pay the Part B premium. If you join an MA plan, you are still on Medicare and retain the full rights and protections entitled to all beneficiaries.

You receive all Medicare-covered benefits through the private MA plan you choose. Some MA plans offer Medicare prescription drug coverage (these are known as MA-PD plans), but other plans do not (these are known as MA-only plans). If you join an MA-only plan, you may or may not join a separate Medicare Part D plan depending on the type of MA plan you join.

On this page, we've compiled information on the 5 types of Medicare Advantage plans:

  1. Health Maintenance Organizations (HMOs)
  2. Preferred Provider Organizations (PPOs)
  3. Private Fee-for-Service (PFFS) Plans
  4. Special Needs Plans (SNPs)
  5. Medical Savings Accounts (MSAs)

Note: Some employer-sponsored and retiree plans offer health coverage through MA plans. See Medicare & Other Health Insurance for more information.

1. Health Maintenance Organizations (HMOs)

If you enroll in a Medicare HMO, you will be required to use only doctors and facilities that contract with your particular HMO. You will have a primary care doctor who manages your health care needs. Before you see a specialist in your HMO network, you must generally get a referral from your primary care doctor (except for an OB-GYN). This requirement is waived for emergency care and out-of-the area urgent care. If your current doctors are not under contract with the HMO, you must select new physicians who are part of the HMO network. 

If you want to see a doctor outside the plan (known as an out-of-network or non-preferred doctor), and you do not have a pre-approved referral, you are responsible for the cost. Most likely, neither your HMO plan nor Medicare will cover the cost.

Some HMOs offer a Point-of-Service (POS) option that allows you to see doctors outside the plan's network, often for an additional cost. HMOs that offer this option may also limit when you can use it.

Some HMOs offer Medicare Part D prescription drug coverage and others do not. If you are in an HMO plan that does not offer Part D coverage, you generally cannot get other Part D coverage outside of your plan. See Prescription Drugs for more information.

HMOs are the most popular type of MA plan in California, but they are not available in every part of the state. In 2015, HMOs are offered in 45 counties and many of those counties have multiple plans.

California's HMO Guide for Seniors (PDF), produced by the University of California, Berkeley, and the State of California Office of the Patient Advocate, is a good resource for learning how managed care plans work. It can also help you understand your rights to get the most out of your plan.

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2. Preferred Provider Organizations (PPOs)

Medicare PPOs — like Medicare HMOs — have networks of providers. If you see providers in the network, you will pay a lower copayment than if you go to providers outside the network (these are known as out-of-network or non-preferred). If you go to out-of-network providers, the PPO covers you at a lower rate than normal (i.e., your copayment will be higher). In a PPO, you generally do not need a referral to see a specialist or an out-of-network provider.

In 2015, local PPO plans are available in 6 counties in California. All the local PPO plans offer prescription drug coverage. There are no statewide PPO plans offered in 2015.

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3. Private Fee-for-Service (PFFS) Plans

Medicare PFFS plans allow you to go to any Medicare-approved doctor or hospital, as long as the terms of your plan's payment are accepted. Before enrolling in a PFFS plan, make sure your doctors and other health care providers accept the plan's terms and conditions for payment. In other words, your providers must agree to bill the plan, not Medicare, for their services. The private company, not Medicare, decides how much it will pay and how much you will pay for the services you receive.

In 2015, PFFS plans are available in 11 counties in California. Some PFFS plans offer Medicare prescription drug coverage. If a PFFS plan does not offer prescription drug coverage, you can join a separate Medicare prescription drug plan (PDP).

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4. Special Needs Plans (SNPs)

Medicare SNPs are designed for certain populations. These include:

  1. C-SNPs  for people with certain chronic or disabling conditions;
  2. D-SNPs — for people who are eligible for both Medicare and full Medi-Cal (“dual eligibles”); and
  3. I-SNPs — for people in certain institutions (like a nursing home) or who still live at home but need the same level of care as someone living in a nursing home.

In 2015, C-SNPs are available in 13 counties; D-SNPs are available in 31 counties; and I-SNPs are available in 4 counties. The goal of SNPs is to provide coordinated health care and services to those who can benefit the most from the special expertise of the plans' providers and focused care management. All SNPs must provide Medicare prescription drug coverage, and most SNPs offer more benefits than Original Medicare.

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5. Medical Savings Accounts (MSAs)

No Medicare MSAs are available in California in 2015. MSAs were offered for the first time in 2007, but no MSAs have been offered since 2010. MSAs, when available, have 2 parts:

  1. High-Deductible Health Plan: A plan that covers Medicare Parts A and B services once the high deductible is met.
  2. Medical Savings Account (MSA): An independent bank account funded by Medicare deposits, which you use to pay for health care services (including meeting the health plan deductible). Note: The amount Medicare deposits into the MSA will not be enough to pay for the entire deductible you must meet before health services are covered.

MSAs are not permitted to offer Part D prescription drug coverage. If MSA members want drug coverage, they must enroll in a separate Medicare prescription drug plan (PDP).

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See also:

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Updated Nov 19, 2014

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