Medicare Advantage and Prescription Drug Plan Fact Sheet

Programs

Medicare Advantage (MA) is also known as Medicare Part C, and is an alternative for beneficiaries to Original fee-for-service Medicare. These MA beneficiaries must be enrolled in both Medicare Part A and Part B, and continue to pay Part B premium. Under the MA program, Medicare contracts with and pays private plans to provide benefits and cover services for applicable beneficiaries during annual open enrollments or upon becoming eligible. Open enrollment period currently runs from November 15 – December 31st. Medicare contracts with private plans under this MA or other prepaid categories:

• Local HMOs
• Local  PPOs
• Private Fee-for-Service plans (PFFS) authorized in 1997, were not required to establish networks, will generally be required to do so but beginning in 2011
• Special Needs Plans (SNPs), restricted to beneficiaries who are dually eligible for Medicare and Medicaid; live in long-term care institutions (or would otherwise require an institutional level of care); or (3) have certain chronic conditions.
• Regional PPOs, established to provide rural beneficiaries greater access to MA, and cover entire statewide or multi-state regions.
• Other types of private plans outside the regular MA program (e.g., cost plans, HCPP, PACE, medical savings accounts, demonstrations and pilots)

The Medicare Prescription Drug Program, also known as Medicare Part D, is available to beneficiaries enrolled in Medicare Part A or Part B, who choose to enroll in a Medicare prescription drug plan, either a stand-alone Part D plan or a Medicare Advantage plan with prescription drug coverage.

Enrollment

As of May 2013, there were 14,691,443 enrollees in Medicare Advantage related programs, including 86.4% in Local HMOs and Local PPOs; 2.6% in PFFS plans; 7.4% in Regional PPOs and 3.6% in Other Programs including Cost, PACE, MSAs, and pilots. 87.7% of these MA beneficiaries had a MA prescription drug plan; 11.6% were Special Needs Plans enrollees; and 18.2% were Employer Plan enrollees. 1
The top five states for Medicare Advantage enrollment as of May 2013, which account for 42% of total MA enrollment, are as follows: California - 1,964,365; Florida - 1,333,278; New York - 1,080,942; Pennsylvania - 954,089; and Texas - 909,142. There are fourteen states and territories with over a one-third penetration rate (compared to the national overall rate of 28.6%): Puerto Rico - 72.1%, Minnesota - 49.9%, Hawaii - 46.2%, Oregon - 42.5%, Pennsylvania - 39.5%, Arizona - 37.8%, California - 37.6%, Ohio - 37.6%, Florida - 36.2%, Colorado - 35.4%, Rhode Island - 35.4%, New York - 33.9%, Wisconsin - 33.7% and Utah - 33.4%. 2
As of May 2013, there were 22,564,532 enrollees in Medicare Prescription Drug Plan enrollees, including 19.8% that are Employer Plan enrollees. 1   The top five states for PDP enrollment, which account for 31.9% of total PDP enrollment, are as follows: California - 1,989,753, Texas - 1,516,077, Florida - 1,324,743, New York - 1,322,296 and Illinois - 1,051,467. There are eighteen states with over a 50% penetration rate (compared to the national overall rate of 43.9%): North Dakota - 65.3%, Delaware - 63.4%, Iowa - 61.5%, South Dakota - 58.9%, Mississippi - 57.7%, Michigan - 57.5%, Nebraska - 57.5%, Vermont - 56.9%, Kansas - 56.2%, Wyoming - 55.9%, New Jersey - 55.3%, Kentucky - 53.8%, Illinois - 53.4%, North Carolina - 52.2%, Indiana - 52.2%, Maine - 51.7%, New Hampshire - 51.0% and Oklahoma - 50.1%. 3
Previously, there were 6.9 million MA enrollees in 1999, 5.6 million in 2005 and 13.1 million in 2012, with overall penetration rates of 18% in 1999, 13% in 2005 and 27% in 2012. 4

Participating Plans

As of May 2013, CMS had 558 Medicare Advantage plan contracts in place; 125 other prepaid plan contracts including 94 PACE agreements; and 83 Prescription Drug Program contracts. 1 Contracts can cover more than one plan for an organization. There are 2,074 MA plans available in 2013, compared to 1,974 in 2012, 2,011 in 2011 and 2,314 in 2010. For 2013, 57.6% of these plans were local HMOs, 26.4% were local PPOs, 8.6% were PFFS plans, 2.5% were Regional PPOs and 4.8% were Cost and other plans. 6
Of the 13,606,244 May 2013 enrollees in local HMO, PPO, PFFS and other plans represented by 271 parent organizations, the top five parent organizations had 51% of total enrollment and are as follows: 5

• UnitedHealth Group – 2,617,418
• Humana – 2,057,475
• Kaiser Foundation Health Plan – 1,165,279
• Aetna – 629,517
• WellPoint – 466,977

Of the 1,085,094 May 2013 Regional PPO enrollees represented by five contracting parent organizations, UnitedHealth Group, Inc. held the largest number of enrollees, with 43.9%.  5 As of May 2013, the top five Medicare Prescription Drug Plan contracts by enrollment represent 74.7% of total enrollment and are as follows: 5

• UnitedHealth Group, Inc. – 5,019,241
• CVS Caremark Corporation – 4,453,749
• Humana Inc. – 3,144,575
• Express Scripts Holding Company – 2,764,286
• Coventry Health Care Inc. – 1,476,608

Kaiser Family Foundation found that for 2013 “88 percent of beneficiaries will have access to an HMO and 86 percent will have access to a local PPO. Among beneficiaries in rural areas, 61 percent will have access to an HMO and 72 percent will have access to a local PPO.” They found that the average beneficiary can choose from 10 HMOs, 4 local PPOs, 2 PFFS plans, and 2 regional PPOs in 2013. 6

PDP Benefits

Kaiser Family Foundation found that for 2013, “Slightly less than half (49%) of MA-PDs will offer some prescription drug coverage in the Part D coverage gap, also known as the Part D “donut hole,”… About one quarter (23%) of MA-PDs will limit their gap coverage solely to generics, while another quarter (26%) of MA-PDs will offer some limited gap coverage of brand name drugs as well…In 2013, a larger share of HMOs (54%) and PFFS plans (52%) than local PPOs (41%) and regional PPOs (25%) will offer some prescription drug coverage in the gap beyond the ACA requirements” 6

Premiums

Kaiser Family Foundation found that “In 2013, the average unweighted monthly premium for Medicare Advantage Prescription Drug plans (MA-PDs) will be $51 – a $1 increase over 2012 and identical to the average premium in 2011”  6
Kaiser Family Foundation also found that “The vast majority of Medicare beneficiaries nationwide (87%) will have access to at least one MA-PD that charges them no additional premium for coverage, other than the monthly Part B premium (i.e., “zero premium plans”; Exhibit 7). While zero premium plans are popular, enrollees do not always choose them versus alternative plans that have a premium. In 2012, 57 percent of MA-PD enrollees were in a plan with zero premium.” 6

Regions

CMS has designed 26 MA Regions and 34 PDP Regions, which are used for risk-assignment, reporting and other various purposes. Of the 34 PDP regions, 25 consist of single states. Six regions consist of two states. Three regions encompass more than two states. Of the 26 MA regions, 11 consist of single states. Fourteen of the states that are their own regions for PDP purposes have been combined into seven two-state regions for MA purposes. Two of the PDP two-state regions have been combined into a four-state region. The remaining PDP two-state regions and other multi-state regions remain unchanged for MA purposes.7

Star Ratings

CMS now rates Medicare Advantage plans on a scale of one to five stars, according to the following scale:

• 5 Stars - Excellent performance
• 4 Stars - Above average performance
• 3 Stars - Average performance
• 2 Stars - Below average performance
• 1 Star - Poor performance

The Star Ratings now impact an MA plan’s payments from CMS. Kaiser Family Foundation conducted a study that found 37.2% of MA enrollees were covered by contracts that received an overall rating of 4 or more stars; 56.3% were covered by contracts that received 3 or 3.5 stars; 5.4% were covered by contracts that received fewer than 3 stars; and 1.1% of contracts were not rated by the CMS in 2013. The average star rating weighted by enrollment for MA-PDs is 3.66 for the 2013 Plan Ratings compared to 3.44 in 2012. 8

Payments to Plans

For 2014 Medicare Advantage Monthly Capitation Rates for Plans by County range from Northwest Artic in Alaska ($1,299.39 5 Star / $ 1,234.42 <= 2.5 Star) to Harrisonburg City in Virginia ($689.09 5 Star / $ 660.38 <= 2.5 Star) [There are 100 counties located in the territories of PR, GU and VI with lower rates than Harrisonburg City] 9 Kaiser Family Foundation reports that Medicare payments to plans are projected to total $140 billion in 2013, accounting for 22% of total Medicare spending. 4

Utilization

The following utilization rates apply to Medicare HMOs under the Medicare Advantage program (2011 data – published in 2012) as published in the Sanofi-Aventis Public Payer Digest: 10

• Hospital Inpatient Days Per 1,000 Per Member: 1,643
• Average Inpatient Length of Stay:  6.1
• Physician Encounters Per Member Per Year:  9.6
• Ambulatory Visits Per Member Per Year: 4.3
• Prescriptions Per Member Per Year  29.9
• % Generic Filled Prescriptions: 63.7%

Notes

1 Medicare Advantage, Cost, PACE, Demo, and Prescription Drug Plan Contract Report - Monthly Summary Report (Data as of May 2013), CMS
2 MA State/County Penetration Report- May 2013 CMS
3 PDP State/County Penetration Report- May 2013, CMS
4 Medicare Advantage Fact Sheet, Kaiser Family Foundation, November 2012, http://kff.org/medicare/fact-sheet/medicare-advantage-fact-sheet/
5 Medicare Advantage, Cost, PACE, Demo, and Prescription Drug Plan Organizations - Monthly Report by Contract - June 2012, CMS
6 Medicare Advantage 2012 Data Spotlight, Kaiser Family Foundation, http://www.kff.org/medicare/upload/8258.pdf
7 What are the CMS Medicare Part D prescription drug plan regions? Q1Medicare.com http://www.q1medicare.com/q1group/FAQ.php?category_id=1&faq_id=360
8 Fact Sheet - 2013 Part C and D Plan Ratings, CMS
9 Medicare Advantage Monthly Capitation Rates for 2014 for All Plans Except PACE Plans, CMS
10 Public Payer Digest, 2012–2013, Managed Care Digest Series, Sanofi-Aventis, https://www.managedcaredigest.com/pdf/PublicPayer.pdf