As of 2023, there were 31.2 million elders enrolled in private Medicare plans, known as “Medicare Advantage.” For the first time, that’s more enrollees than in the “Traditional” Medicare program. Seniors choose these private companies because they see some “advantage” for doing so.

Last year, two companies accounted for 60% of the enrollees in Medicare Advantage individual plans: United Health Care (endorsed by AARP) had close to eight million members, and Humana had five million members. There were another 9.7 million seniors in group contracts sold by union-sponsored plans, or special needs plans.

Medicare Advantage began in 1997, during the Clinton presidency, when the Balanced Budget Act (BBA) created Medicare Part C, first known as the “Medicare+Choice” program. In 2003, the Medicare + Choice plans were renamed Medicare Advantage plans, as part of the Medicare Modernization Act.

While Traditional Medicare is administered by the government, Medicare Advantage is only regulated by the government but owned by private insurance companies. Medicare Advantage covers all services in Medicare Part A (inpatient services) and B (outpatient services), but the “advantage” is in the “supplemental benefits,” like dental, vision, hearing, and prescription drug services. Advantage plans even offer “flex card” services allowing members to get health-related, over-the-counter product — from toothpaste to Tylenol — for free, up to a limit, set every three months.

Seniors who don’t expect to need much inpatient care, can enroll in “zero premium” Advantage plans, but all Advantage members still have to pay the Medicare Part B monthly premium — deducted from their Social Security check — which in 2024 will total $2,096 per year. In many cases, if you are in a Medicare Advantage plan, you must use doctors and providers who are in the plan’s “network,” while Traditional Medicare lets you go to any doctor or hospital, and see a specialist without a referral. Most Medicare Advantage plans include Part D (drug) coverage, while Traditional Medicare has a separate premium for drug coverage.

Since the creation of these Advantage plans, there have been voices warning of the “privatization” of Medicare. On Dec. 7, U.S. Sen. Elizabeth Warren and three of her colleagues sent a letter to the administrator of the federal Centers for Medicare and Medicaid Services (CMS) stating :“In the last few years, federal watchdogs have released numerous reports examining concerning trends in Medicare Advantage (MA).” Warren noted that the Health and Human Services Office of the Inspector General found that 13% of prior authorization denials and 18% of payment denials “actually met Medicare coverage rules, meaning the Medicare Advantage plan delayed or denied seniors access to services that would have likely been approved under traditional Medicare.”

The Medicare Payment Advisory Commission found that seniors in Advantage plans who use more services are more likely to disenroll from Medicare Advantage than healthier seniors. The Government Accountability Office reported in 2021 that enrollees in Medicare Advantage plans were more than twice as likely as other enrollees to switch to Traditional Medicare during their last year of life. “Additionally,” Warren wrote, “researchers have reported billions in overpayments to MA plans, largely driven by favorable selection and shortcomings in the current risk adjustment model.” According to Warren: “Between 2010 and 2019, CMS paid MA plans at least $106 billion in excess payments.” In 2023, Medicare Advantage plans received $27 billion in additional payments, largely due to diagnostic coding manipulation.

Senator Warren wants CMS to collect “prior authorization” data by type of service, so the government can evaluate whether prior authorization denials are more common for certain types of services or patients. She also wants plans to report the reasons for denial of prior authorizations, so regulators can assess if such requests were appropriately denied. A 2022 report from the HHS Inspector General found that prior authorization denials by Advantage plans were “likely preventing or delaying medically necessary care for Medicare Advantage beneficiaries.” Warren also wants seniors in these plans to be able to compare prior authorization response times across plans when selecting coverage, to see which plans are the best at processing these authorizations.

In November 2023, 32 members of Congress sent their own letter criticizing Advantage plans for their “inappropriate use” of artificial intelligence or algorithmic software leading to widespread and persistent problems related to denials of care and payment.”

A recent survey found that 89% of Advantage plan members were satisfied with their health plan but these recent letters from Congress may cause seniors to look deeper into the hidden “disadvantages” in their plans.

Al Norman, of Greenfield, worked in the field of elderly home care in Massachusetts for more than three decades. His columns appear regularly in the Recorder.