Medicare managed care plans are HMOs or PPOs that provide basic Medicare coverage plus other coverage to fill the gaps in Medicare coverage. Many Advantage plans have no monthly premiums, and some plans even provide a credit toward your Part B monthly premium that's taken out of your Social Security check.
With original Medicare, you usually pay 20% of the Medicare-approved amount, with no yearly limit, after you meet the deductible. With Medicare Advantage plans, you may have small copays for doctor visits, and slightly larger copays for hospital stays or outpatient procedures, but most other costs are covered, and there's a yearly limit on the amount you pay for out-of-pocket costs.
The main difference between Medicare and Medicare Advantage, besides the cost, is that Medicare Advantage plans generally require you to go through your primary care doctor to get referrals to specialists. To learn more about the difference between Medicare and Medicare Advantage, see our article on Medicare Part C.
Medicare managed care plans fill the gaps in basic Medicare, as do Medigap policies. However, Medicare managed care plans and Medigap policies operate in different ways. Medigap policies work alongside original Medicare to pay the bills: Medical bills are sent both to Medicare and to a Medigap insurer, and each pays a portion of the approved charges. Medigap plans require separate monthly premiums. Depending on your age, health, and gender, the premiums for Medigap plans can be quite expensive.
Medicare managed care plans, on the other hand, provide all the coverage themselves, including all basic Medicare coverage, plus other coverage to fill the gaps in Medicare coverage. Medicare Advantage plans can provide benefits not covered by original Medicare, such as eyeglasses, hearing aids, dental coverage, and membership to fitness centers.
The extent of coverage beyond Medicare, the size of premiums and copayments, and decisions about paying for treatment are all controlled by the managed care plan itself, not by Medicare. Medicare Advantage plans can't deny enrollment to anyone based on age or pre-existing conditions.
The basic premise of managed care is that the member-patient agrees to receive care only from specific doctors, hospitals, and others—called a network—in exchange for reduced overall healthcare costs. This makes Medicare Advantage plans generally cheaper overall than Medigap plans. But it can also be a negative of Medicare Advantage plans.
Some people decide to stick with original Medicare and add a costly Medigap plan so that they can avoid having to go to their primary care doctors to get referrals to see specialists and waiting to get those referrals authorized.
Several varieties of Medicare managed care plans are available. Some have narrow restrictions on consulting with specialists or seeing providers from outside the network. Others give members more freedom to choose when they see doctors and which doctors they may consult for treatment. Plans that offer more choices in coverage—especially PPOs and HMOs with point-of-service options—charge higher premiums.
If you're considering a Medicare managed care plan, you'll need to decide whether any of the plans available in your area offer adequate care at an affordable cost -- including the costs of copayments for doctor visits and prescription drugs. (To see a comparison of managed care plans in your area, go to Medicare Advantage plan options.)
Here are some of the basic types of managed care plans.
The HMO is the least expensive and most restrictive Medicare managed care plan. It is also by far the most common type of Medicare managed care plan. There are four main restrictions with a Medicare HMO plan.
Care within the network only. Each HMO maintains a list—called a network—of doctors and other healthcare providers. The HMO member must receive care only from a provider in the network, except in emergencies. If the plan member uses a provider from outside the network, the plan pays nothing toward the bill, and Medicare will not pay any of the bill either because the plan member has withdrawn from traditional Medicare by joining managed care. The plan member must pay the entire bill out of pocket.
You might be able to discuss with your doctors a particular HMO you are considering. Ask whether your doctor has heard of problems with the plan, particularly with approval of treatments, referrals to specialists, or early release from inpatient hospital care.
All care through primary care physician. An HMO member must select a primary care physician from the plan's network and see this doctor first for most medical needs. An HMO member can only see other doctors or providers—even from within the plan's network—with a referral by the primary care physician. Even if you regularly see a variety of specialists, your primary care physician must usually refer you to those doctors. You may not simply make an appointment to see them on your own.
Prior HMO approval of some services. HMOs may require that your primary care physician or other network physician obtain prior approval from the plan for certain medical services the doctor may want to prescribe. If plan administrators do not believe a service is medically necessary, or believe service from a non-specialist or other less expensive treatment would do just as well, they may deny coverage for that prescribed service.
Limited appeal rights. Within every HMO plan, a member has a limited right to appeal the plan's decisions. However, for the vast majority of HMOs, reviewers who work for the HMO hear the appeal. There is no review by outside experts, and no appeal to Medicare; only a few HMOs have outside review panels that consider appeals in serious cases.
A few HMOs have a significant wrinkle that makes them more attractive—and more expensive—than standard HMO plans. These plans offer what is called a point-of-service option. This option allows a member to see physicians and other providers who are not in the HMO's network, and to receive services from specialists without first going through a primary care physician (called "self-referring").
However, if a member does go outside the network or sees a specialist directly, the plan pays a smaller part of the bill than if the member had followed regular HMO procedures. The member pays a higher premium for this plan than for a standard HMO plan, and a higher copayment each time the point-of-service option is used.
Although it has a different name, using a PPO works much the same as using an HMO's point-of-service option. PPOs still use a network of providers, and if a member receives a service from a PPO's network of providers, the cost to the member is lower than if the member sees a provider outside the network. (Unlike an HMO or an HMO with a point-of-service option, however, a PPO does not always require the patient to go through a primary care physician for referrals to specialists. PPO patients are usually allowed to self-refer to some specialists.)
PPOs tend to be more expensive than standard HMOs, charging both a monthly premium and a higher copayment for non-network services. However, many people find that the extra flexibility in choosing doctors is an important comfort to them, and therefore worth the extra money.
The PSO is a group of medical providers—doctors, clinics, and a hospital—that skips the insurance company middleman and contracts directly with patients. As with an HMO, the member pays a premium, as well as a copayment each time a service is used.
Some PSOs in urban areas are large conglomerations of doctors and hospitals that offer considerable choice in providers, but many PSOs are small networks of providers that contract through a particular employer or other large organization or that serve a rural area that has no HMO.
For help sorting through the different plans available, see Nolo's article Medicare Managed Care: Choosing a Plan. For more detailed information on Medicare managed plans, and other health insurance options, get Social Security, Medicare, and Government Pensions, by Joseph L. Matthews and Dorothy Berman Matthews (Nolo).
There are specific time periods that you can sign up for a Medicare Part C Advantage plan. When you can up for Part C depends on your age and whether you or your spouse are still working. For more information, see Nolo's article on Medicare enrollment periods and coverage start dates.
Updated September 9, 2022
]]>Depending on your income and other benefits you are eligible for, as well as the availability of other Medicare Advantage Plans in your area, a Medicare SNP may be a good choice for your health care (see more on the benefits of SNPs below). However, choosing a Medicare Advantage plan is complicated, so you should study all of the plans available in your area and consider which is the best for you.
Medicare rules limit who can enroll in an SNP. Only those who are eligible for Medicare Part A and Part B can join an SNP. (You sign up for a Medicare Advantage Plan instead of getting Medicare Part A and B straight from the government. Medicare Advantage is often referred to as Medicare Part C.) Folks eligible for Medicare Parts A and B include seniors over 65 and persons with disabilities who are collecting SSDI (Social Security disability insurance).
Also, you must either have a chronic condition, be eligible for Medicaid (and Medicare), or need institutional-level care to be eligible for an SNP.
Medicare allows private companies to offer SNPs to Medicare beneficiaries who suffer from particular chronic and disabling conditions. Those SNPs are called chronic condition SNPs (or C-SNPs). In 2013, the conditions that make a person eligible for a chronic condition SNP are:
Even if you have one of the conditions on this list, you must check to see whether an SNP for your condition is offered where you live. C-SNPs are not required to cover all fifteen conditions, and many are limited to one or a few conditions on the list.
Low-income seniors and low-income people who are severely disabled can be eligible for Medicaid and Medicare at the same time. These folks are called "dual-eligibles." In some situations, Medicaid can pay all of the out-of-pocket health care costs for a dual-eligible Medicare beneficiary.
If you are eligible for both Medicare and Medicaid, then you could be eligible for a particular kind of SNP called a dual-eligible SNP (D-SNP). Private companies that offer D-SNPs are permitted to restrict them to certain categories of dual-eligible beneficiaries, so check to see if you might be eligible for a D-SNP in your area. Dual-eligible SNPs are the most common kind of special needs plan.
Medicare beneficiaries who live in institutions or need institutional levels of care in their homes can be eligible for institutional SNPs (I-SNPs). Medicare allows private companies to offer I-SNPs to Medicare beneficiaries who have been in an institution for 90 days or who are expected to need institutional level care for at least 90 days. Institutions include long-term care facilities offering skilled nursing services, intermediate care facilities for individuals with intellectual disabilities, and inpatient psychiatric facilities.
SNPs are marketed to people with particular conditions and offer benefits that might appeal to those people. For example, a private company might offer an SNP for people with diabetes, and the plan benefits might include more coverage for the best medications used to treat diabetes, a network of doctors who specialize in diabetes treatment, and more preventative care than might be available from other Medicare Advantage plans in the same location.
An SNP for dual-eligible individuals might offer the services of a care coordinator, a person whose job it is to help the beneficiary find appropriate services in her community.
A Medicare special needs plan can make sense for those with a permanent disability, folks with chronic or multiple conditions such as diabetes, or diabetes and cardiovascular problems, and elderly people with dementia who need institutional care. Many people are able to drop their medi-gap policies when they join a special needs plan because their special needs plan fills in the gaps not covered by traditional Part A and B Medicare.
Medicare rules restrict the time that a person can apply for any Medicare plan, including an SNP. A new Medicare beneficiary can join an SNP anytime during the initial enrollment period. If you are eligible for Medicare because of your age, the initial enrollment period is a seven-month period around your 65th birthday. If you are eligible for Medicare because of your disability, the initial enrollment period is a seven-month period around your 25th month of disability.
Once you are enrolled in an SNP plan, you can switch plans only between October 15th and December 7th of every year. There are a few exceptions to that rule, however. If you are newly diagnosed with a condition that makes you eligible for an SNP, then you can switch to an SNP regardless of whether it is the open enrollment period. If you move out of your SNP’s service area, you can also switch plans, regardless of the timing.
You can see what Medicare Advantage plans, including SNPs, are available in your area, by using this online Medicare Plan Finder at medicare.gov. However, there are many Medicare plans available, and it can be confusing to choose the best one for you.
Fortunately, every state has a State Health Insurance Assistance Program (SHIP) that can provide individualized counseling to you about the different Medicare Advantage plans available and how much you could expect to pay under a particular plan, based on your expected health needs and medications. Most often, a state’s SHIP is part of its agency serving seniors and disabled individuals. To find the SHIP in your state, use the SHIP Resource Center.
You can also find out what plans are available to you and get the contact information for your local SHIP by calling Medicare at 800-MEDICARE or looking in the back of the “Medicare & You” handbook that should be mailed to you each fall. You can find more information about Medicare SNPs in Medicare's Guide to SNPs.
]]>