Medicare Advantage

More than half of all Medicare-eligible beneficiaries (54%, or 32.8 million people) enrolled in Medicare Advantage (MA) in 2024, a figure projected to reach 60% by 2028. MA, or Medicare Part C, is a public-private partnership through which private insurers offer comprehensive health coverage to seniors and individuals with disabilities as an alternative to traditional Medicare.

Under the law, MA plans must cover at least the same inpatient and outpatient services provided by traditional Medicare Part A and Part B to receive federal Medicare funds which are paid as a fixed monthly amount for each beneficiary’s expected healthcare costs. Within the MA program, a private insurer receives a set amount of federal dollars (sometimes supplemented by small premiums from the beneficiary) to manage the covered beneficiary’s care. The federal dollar amounts vary (are risk adjusted) to account for the health status of the beneficiary based on his/her medical record’s diagnostic and coding information. The program is designed to incent MA plans to proactively manage chronic conditions, reduce avoidable hospitalizations, and improve population health.

Members of Congress and segments of the healthcare industry are increasingly concerned that some medical management tools intended to ensure that the appropriate care is delivered in the appropriate setting are unduly restrictive for providers and beneficiaries. As a result, policymakers are considering reform proposals to provide greater clarity into MA plans’ prior authorization processes, reimbursement timeframes, clinical documentation requirements, marketing practices, and provider networks.