Every year, the Commission provides a status report on the Medicare Advantage (MA) and Part D programs. These reports were presented at our December and January meetings. To monitor each program’s performance, we examine enrollment trends, and plan availability for the coming year, as well as a variety of other factors. Medicare’s payment systems for MA and Part D differ from fee-for-service (FFS) payment systems under Part A and Part B. For both programs, Medicare pays competing private plans to deliver benefits to enrollees. Instead of setting prices administratively, for MA, Medicare’s payments are based on bids submitted by plan sponsors. Although the Patient Protection and Affordable Care Act (PPACA) mandated benchmark reductions, our analysis indicates that beneficiary access to plans has increased since 2010.
MA plan access:
In 2016, 99 percent of all Medicare beneficiaries will continue to have access to an MA plan. This has been the case since 2010. Nationally, on average, nine plans are offered in each county in 2016, up from an average of eight in 2015. In most counties, a large number of MA plans are available to beneficiaries. For example, beneficiaries in New York City or Cleveland can choose from 40 or more plans in 2016.
The percentage of beneficiaries that have access to an MA coordinated care plan (CCP) will increase in 2016. Health maintenance organizations (HMOs) and preferred provider organization (PPOs), together classified as CCPs, have become more widely available in recent years. Ninety-six percent of Medicare beneficiaries have an HMO or local PPO plan operating in their country of residence, up from 95 percent in 2015. Regional PPOs are available to 73 percent of beneficiaries, up from 70 percent in 2015.
An analysis of the market structure of the MA program shows that compared to 2007, MA enrollment is more heavily concentrated in 2015. The top 10 MA organization had 69 percent of total enrollment in 2015, compared to 61 percent in 2007. However, on average there are more MA organizations participating by county. In 2007, the per-country average number of MA organizations offering CCPs was 2.6. In 2015, the average increased to 3.2. Analysis also indicates that the number of plan choices available to the average beneficiary continues to increase. We found that the average beneficiary has 18 plans (including 17 CCPS) available in 2016, up from 17 plans (including 16 CCPs) in 2015.
Traditional Medicare did not offer an outpatient prescription drug benefit prior to 2006. Before 2006, Medicare Advantage plans were an important source of prescription drug coverage for Medicare beneficiaries. But beginning in 2006, all beneficiaries had access to a prescription drug plan, either through free-standing prescription drug plans (PDPs) or a MA plan that included drug coverage (MA-PD). The percentage of Medicare beneficiaries covered under Part D has grown over time as have those in MA-PDs. Between 2007 and 2015, the share of Medicare beneficiaries enrolled in Part D plans grew from about 54 percent to 70 percent, or on average 6 percent annually.
Part D plan access:
In 2016, plan sponsors are offering 886 PDPs and 1,682 MA-PDs, a 12 percent decrease in the number of PDPs offered compared with 2015, and a 5 percent increase in MA-PDs. The decline in PDPs is due largely to a proposed change in policy, requiring that sponsors offer only one basic and one enhanced benefit plan.
In response, sponsors have consolidated their plan offering into fewer numbers of more widely differentiated products. In 2015, the top 9 insurers sponsored plans that accounted for 78 percent of total enrollment. Proposed mergers between some of the largest insurers would concentrate Part D enrollment even further. Even with these consolidations, beneficiaries typically have between 19 and 29 PDPs and 3 and 10 MA-PDs to choose from depending on county of residence. For 2016, 218 premium-free PDPs are available to enrollees who receive the low-income subsidy (LIS), a 23 percent decline from 2015. Most regions of the country continue to have at least 3 and as many as 10 PDPs available at no premium to LIS enrollees.