Medicare Advantage (MA) is private insurance that Medicare beneficiaries can enroll in as an alternative to traditional Medicare. The MA program has grown dramatically in recent years and now accounts for more than half of all Medicare enrollment. The Center for American Progress estimates that the Centers for Medicare and Medicaid Services (CMS) overpays MA plans by 22 percent to 39 percent, with overpayments in 2024 alone estimated to total between $83 billion and $127 billion. Yet there is no clear evidence that the MA program leads to improved health care quality, nor is there evidence that the program advances health equity for enrollees. With this in mind, CMS must exercise a high degree of oversight over the program, which necessitates more and better information about how MA plans are operating.
CMS has taken several important steps to bring more transparency and accountability to MA, yet remaining data gaps limit regulators in their ability to conduct oversight of plan performance; constrain researchers in their ability to fully assess the program’s impact; prevent beneficiaries from making fully informed choices; and make it difficult for policymakers and others to fully address disparities in health equity.
In January 2024, CMS released a request for information seeking public feedback on ways to strengthen MA. As outlined in CAP’s May 2024 response, CMS must enhance MA data collection and reporting requirements to enable Medicare beneficiaries to make more fully informed enrollment choices, protect MA plan enrollees from inadequate coverage and harmful practices, and support MA-contracted clinicians’ ability to practice appropriate and high-quality care. To advance these goals, CMS must fill data gaps related to MA broker compensation, network adequacy, prior authorization, supplemental benefits, disenrollment, and enrollee out-of-pocket (OOP) cost expenditures.
More from CAP
Read the Center for American Progress response to the Center for Medicare and Medicaid Services’ request for information.
1. Broker and agent financial arrangements
Nearly one-third of all new Medicare enrollees receive guidance from brokers or agents when choosing an MA plan. Brokers can benefit financially by directing enrollees to specific plans and in pushing enrollees toward plans with which they have financial arrangements. Brokers and agents currently do not have to publicly disclose how they are compensated by MA plans.
Beneficiaries should know whether and how the people steering them toward enrollment decisions are benefiting from those decisions. To that end, CMS should collect and publish complete data on broker compensation, report when a broker is involved in a beneficiary’s enrollment in an MA plan, maintain a public database of payments, and require brokers to proactively disclose whether they are being compensated by plans.
2. Network adequacy and directory accuracy
Prospective MA enrollees should know with certainty whether they will have access to a range of in-network providers they deem sufficient for their needs upon signing up for an MA plan. Yet a Prospective enrollees cannot make informed choices when the information they are being provided is inaccurate.
Recent CMS regulations have partially addressed this issue by strengthening marketing restrictions on MA plans and third-party marketing organizations, but CMS must take further action to ensure that networks are adequate and that beneficiaries can feel confident they are getting what they sign up for. One step in this direction would be for CMS to consider requiring MA plans to attest network data accuracy every 90 days, which would comport with the standards qualified health plans are held to as a result of the No Surprises Act. Network accuracy reporting compliance should also be made public alongside MA plan information, so prospective enrollees can see clearly whether each MA plan’s networks are up to date.
CMS, MA plans, and MA brokers should provide more clarity on the tradeoffs between MA and traditional Medicare
For many beneficiaries, enrolling in MA can effectively mean giving up the ability to ever affordably switch back to traditional Medicare—which is a tradeoff that beneficiaries often do not fully understand.
For enrollees with lower incomes and without access to other supplemental forms of coverage such as Medicaid, traditional Medicare can be costly. Coinsurance is significant, and there is no limit on annual OOP costs. To make traditional Medicare more affordable to use, beneficiaries can pay for private supplemental Medigap plans, which both lower and cap OOP expenses. Medigap premiums, however, can cost thousands of dollars per year. That makes MA plans—which have low to no premiums and also cap OOP costs—an attractive alternative to traditional Medicare plus Medigap for many beneficiaries.
However, if a beneficiary enrolls in an MA plan and later wants to switch back to traditional Medicare—perhaps because they find the MA plan’s network to be too restrictive, or the plan’s prior authorization requirements too burdensome—they may not be able to afford to do so. That is because after an initial window, in all but four states, Medigap carriers can deny or charge people with preexisting conditions substantially more for coverage.
Given how consequential this choice between MA and traditional Medicare is, CMS should make the tradeoff clearer and more prominent in its own Medicare guidance; require brokers and agents to proactively share and confirm understanding of this information with beneficiaries in plain language when they are considering signing up for MA; and impose significant penalties on brokers, agents, and MA plans if they fail to do so.
3. Prior authorization
Prior authorization (PA) is a utilization management tool through which insurance companies require advance approval for certain medical care or medications as a condition for payment. While traditional Medicare requires PA for very few services, 99 percent of MA enrollees are in plans that require PA for some services. More than 35 million PA requests were submitted to MA insurers in 2021—an average of 1.5 per enrollee. PA request frequency and volume varied meaningfully across MA insurers in 2021, ranging from 0.3 to 2.9 PA requests per enrollee on average that year.
One-third of physicians now have staff members assigned exclusively to prior authorization, and nearly 9 in 10 physicians describe the burden associate with prior authorization as high.
PA requirements can create an immense administrative burden on health care providers. One AMA survey found that physicians completed an average of 45 PA requests per week in 2021, which required an average of 14 hours of work for physicians and their staff. One-third of physicians now have staff members assigned exclusively to PA, and nearly 9 in 10 physicians describe the burden associated with PAs as high. Waiting for PA approvals may also result in actual harm to patients’ health.
When making enrollment decisions, beneficiaries should know how heavily individual plans use PA in making care or reimbursement decisions. Current CMS rules do not require a sufficient level of data granularity in PA reporting. Average timeframes are reported only at the contract level, not the plan level (an MA payer may administer multiple MA plans under one contract with CMS), and CMS does not require that reported PA data include timeframes by type of service or specific conditions. CMS should address these shortcomings through future rulemaking and also publicize data on PA use so that prospective enrollees can consider that information when deciding between plans. These changes would also allow CMS to more fully ensure that all plans are complying with CMS rules for PA.
4. Supplemental benefits use and spending
Supplemental benefits such as dental coverage and fitness benefits, which are extensively marketed by MA plans, may attract beneficiaries only to be unutilized or underutilized, nullifying any potential health value. There is a dearth of information about supplemental benefit use, but the little research that is available suggests that MA plan coverage for dental, vision, and hearing services has not resulted in improved access for beneficiaries.
CMS recently required MA plans to report utilization and cost data for all supplemental benefit offerings. However, CMS does not require that data be reported at the beneficiary level, so likely cannot determine how spending varies amongst MA plan enrollees or how much different groups are actually spending OOP on supplemental benefits that should be covered by their MA plans. Plans are also required to report spending by category of supplemental benefit (such as dental or hearing), and some levels of spending by transaction type (such as dental X-ray or hearing aids), but that information is also not reported at the beneficiary level. Furthermore, there is no public data on how often PA requests for supplemental benefits are denied, or why they are denied. CMS should collect and publish complete, disaggregated data on utilization and OOP spending for all supplemental benefits, at both the plan and beneficiary level, as well as complete data on PA use and outcomes for supplemental benefits.
5. MA plan disenrollment rates
Understanding the demographic and health characteristics of MA enrollees who switch between MA plans or disenroll from MA plans in favor of traditional Medicare coverage is important for spotting alarming patterns and ensuring that MA plans are operating consistent with CMS’ commitment to equity. How many people leave a particular MA plan may also be helpful for prospective enrollees to know when choosing whether to enroll in MA or when comparing MA plans. Currently, this data is collected and reported in aggregate, at the MA contract level, by CMS. CMS should require more granular reporting such that this information is disaggregated and stratified across demographic and health characteristics of disenrollees and make this data publicly available—to both researchers and prospective enrollees—at the MA plan level.
CMS should collect more granular data from MA plans to identify and correct for health disparities
In the “CMS Framework for Health Equity 2022–2032,” CMS outlines an “unwavering commitment to advancing health equity.” Greater transparency is necessary to effectively protect beneficiaries from disparate health care quality outcomes in MA. For example, Black Medicare beneficiaries are almost twice as likely to be enrolled in MA as traditional Medicare, yet a 2023 review found that Black MA enrollees had worse outcomes than white enrollees on more than half of examined measures. Due to gaps in MA reporting, it is difficult to determine the causes of these disparities and therefore nearly impossible to find solutions.
Policymakers must be able to monitor and correct for whether network adequacy, the use of prior authorization, supplemental benefit uptake, disenrollment rates, and OOP spending systematically vary among historically marginalized groups. To that end, CMS must collect and publish more granular data—disaggregated by enrollee race, ethnicity, gender, income level, and other important demographic characteristics—at both the plan and beneficiary level.
6. Enrollee out-of-pocket cost expenditures
When prospective enrollees compare MA plans, they can see what the upper limits of their OOP costs will be and can estimate what this might mean for them. This data, while helpful, does not reflect what an average beneficiary’s actual OOP spending is. That information is collected by CMS but is not published.
Prospective enrollees should be able to compare plans based on what their typical range of beneficiaries’ actual OOP spending is, not only what the upper limits of OOP spending are. Prospective enrollees should also be able to see what proportion of an MA plan’s beneficiaries hit their OOP maximum each year. Additionally, researchers should have the ability to study what OOP spending looks like for both MA and traditional Medicare beneficiaries so that the true actuarial value of MA plans can be compared to the traditional Medicare program. To that end, CMS should publish actual OOP spending information as part of MA encounter data.
Conclusion
CMS has taken important steps to bring more accountability and transparency to the MA program, which now accounts for more than half of all Medicare enrollment at a significant expense to taxpayers. To ensure the program is functioning as intended and meeting the needs of Medicare enrollees and providers, CMS must fill remaining data gaps related to MA broker compensation, network adequacy and accuracy, prior authorization, supplemental benefits, disenrollment, and enrollee OOP cost expenditures. It is especially important that this information be stratifiable across key enrollee characteristics—such as race, ethnicity, and disability status—so that CMS can monitor for disparities and make swift adjustments in service of the agency’s commitment to health equity.