How Medicare Advantage Plans Can Increase Consumer Satisfaction

Medicare Advantage plans are more likely to achieve high satisfaction scores when they offer a consistent product message and brand experience and have control over the delivery of care, according to a J.D. Power study. Members frequently choose a plan they understand and find easy to work with. The study measures member satisfaction with Medicare Advantage plans based on six factors in order of importance: coverage and benefits (26%); customer service (20%); provider choice (15%); cost (14%); information and communication (13%); and claims processing (13%).

Improving communications with enrollees is one of the greatest opportunities for health plans to improve member satisfaction. It’s the only factor in the study that has not seen a significant improvement in member satisfaction. Valerie Monet, director of the insurance practice at J.D. Power, said that many plans have multiple product design features and come with technical manuals that are 20 pages or longer. Expecting members to be experts on these services and benefits is a losing battle for the plan and the member. Members expect their plan to provide guidance, ranging from assistance in selecting a doctor to helping them understand prescription costs.

Forty-eight percent of members agree strongly that their health plan is a trusted partner in their health and wellness, which increases satisfaction by 166 points. Satisfaction is 136 points higher among the 89% of members who completely understand how to find a doctor under the plan. Satisfaction is 110 points higher among the 88% of members who say their doctor spends the right amount of time with them.

Members expect immediate attention or advice when they call their health plan provider. Forty-one percent of those who called their plan had to give the same information more than once to get their issue resolved. Only 35% of members said that customer service provided all of the information they needed on the costs of prescription medications. Ninety-one percent of customers who are delighted with their Medicare Advantage plan (satisfaction scores of 901 or higher), say they will definitely renew their policy, and 89% will definitely recommend their plan to family and friends. Loyalty drops to 71% and advocacy to 66% among members who are pleased with their plan (scores of 751-900). Plans garnered the following member-satisfaction scores:

  • Kaiser Permanente 851
  • Highmark 791
  • Humana 782
  • UnitedHealthcare 775
  • Cigna 774
  • Aetna 773
  • Anthem 765
  • Health Net 756
  • WellCare 742

In 2016, members reported an average increase of $117 in annual premiums to $1,497. They also have more out-of-pocket expenses. On average, member deductibles are $1,705 in 2016, a $310 jump from 2015. Satisfaction is 136 points higher when members completely understand their out-of-pocket costs. Monet said that members are more satisfied and see the value of their plan when they have a better understanding of how much they are paying and what the costs cover.” For more information visit

HMOs Beat PPOs on Cost and Quality


California’s commercial HMOs outperform commercial PPOs on most clinical quality measures. They also consistently provide less costly care. The average yearly cost is $4,245 per HMO enrollee versus $4,455 per PPO enrollee, according to the California Regional Health Care Cost & Quality Atlas. The report comes from the Integrated Healthcare Assn., the California Health Care Foundation, and the California Health and Human Services Agency. Differences in benefit designs don’t explain the cost variation since the total cost of care includes enrollee cost-sharing (deductibles and coinsurance) as well as insurance payments to providers.

HMOs may be performing better because they rely on integrated care networks, which generally accept capitation (fixed per-member, per-month payments). So they are accountable for the patients’ health and are generally rewarded for it, according to the report. So why is HMO enrollment declining? PPOs are often less costly for employers since they reduce premiums with higher enrollee cost-sharing, such as deductibles and coinsurance. But employers should look at the whole picture since HMOs produce superior results when you consider quality and the total cost of care, according to the report.

Quality of Care
California’s commercial HMOs perform better than their national counterparts on every clinical quality measure except asthma medication management. At the same time, California’s commercial PPOs perform worse than the national average on five of the six measures.

When Kaiser Permanente is removed from the analysis, the difference in clinical quality between HMOs and PPOs is cut by about half. Also, the performance difference on risk-adjusted total cost of care narrows substantially, but HMOs still outperform PPOs.

Quality is highest in Northern California, solid in Southern California, and weakest in Central California. The study reveals these regional differences is quality:

  • Northern California outperforms Central and Southern California on clinical quality.
  • Central California falls below the statewide average on key clinical measures for cancer, diabetes, and asthma.
  • The lowest performing region is the Eastern region 13, which includes Central California counties Mono, Inyo, and Imperial.
  • The highest performing region is Contra Costa County region in Northern California.
  • Clinical quality scores vary significantly on some measures. For example, 33% of commercial enrollees with diabetes in Alameda County region six have poorly controlled blood sugar, compared to 75% in the Eastern region 13.
  • In Southern California, San Diego County region 19 is the highest performing region, outperforming Northern California regions: San Mateo County region eight and San Francisco County region four.

If all commercially insured Californians got the same quality of care as top-performing regions, nearly 200,000 more people would have been screened for colorectal cancer and 50,000 more women would have been screened for breast cancer in 2013. If care is provided to all Californians at the same cost as in San Diego, the cost of care would decrease 10% for commercially enrolled people. Many factors contribute to regional performance, including socioeconomic characteristics and the availability of medical services.

Medicare Advantage
The quality and cost of care varies widely for seniors enrolled in Medicare Advantage. For example, in North Bay counties, 91% of women have gotten appropriate breast cancer screening compared to 70% in the Eastern region 13. The average annual per-enrollee total cost of care for Medicare Advantage enrollees ranges from $11,500 in San Diego County to $14,500 a year in Los Angeles region.

Cost of Care
Geographic variation in cost of care is dramatic—a difference of $1,800 in the average annual per-enrollee total cost of care between the most costly and least costly regions. With one exception, all Northern California regions have higher annual per-enrollee costs than the statewide commercial average of $4,300 while all Southern California regions fall below the statewide average. Central California regions show mixed results on cost. HMOs have a lower average total cost of care than do PPOs in 12 of the 18 regions. More tightly managed care in HMOs may contribute to a lower cost of care. Yet, inpatient bed days and readmission rates are similar for HMOs and PPOs. Emergency department visit rates are actually higher for HMOs. The statewide average annual per-enrollee cost of care for commercially insured Californians is $4,300. Kern County is the least costly HMO region. It’s $1,800 per enrollee, per year less than in Santa Clara County, which is the costliest HMO region. The least costly PPO region is Los Angeles at $2,400 less than San Francisco County, which is the costliest PPO region.

H.R.5659 Would Open Medicare Advantage to End-Stage Renal Patients

Dialysis Patient Citizens (DPC) hailed the introduction of H.R. 5659 as the latest milestone toward opening Medicare Advantage enrollment to end-stage renal disease (ESRD) patients. Stephen Anderson, a patient advocate from Indianapolis said, “As a dialysis patient of five years, I am fortunate to have secondary insurance to cover what Medicare does not. However, I know many patients in my facility don’t have that luxury. Providing dialysis patients access to Medicare Advantage will greatly help to reduce our out-of-pocket costs while improving our health with care coordination measures,” said. A study comparing outcomes of dialysis patients grandfathered into Medicare Advantage plans found that they have lower mortality rates than id their peers in fee-for-service plans. For more information, visit

Medicare Advantage 2016 Spotlight


The number of Medicare beneficiaries enrolled in Medicare Advantage has climbed steadily over the past decade; this trend in enrollment growth continues in 2016. The enrollment growth has occurred despite provisions under the ACA that reduce payments to plans. As of 2016, the payment reductions have been phased in fully in 78% of counties, accounting for 70% of beneficiaries and 68% of Medicare Advantage enrollees, according to a study by the Kaiser Family Foundation. The following are study highlights:

  • Medicare Advantage enrollment has increased in virtually all states over the past year. Almost one in three people on Medicare (31% or 17.6 million beneficiaries) is enrolled in a Medicare Advantage plan in 2016. The penetration rate exceeds 40% in five states.
  • 18% of enrollees are in a group plan. Employers and their retirees still favor local PPOs over HMOs.
  • Enrollment is still highly concentrated. If Aetna acquired Humana with no divestitures in 2016, the combined firm would account for 25% of Medicare Advantage enrollees nationwide. UnitedHealthcare and Humana account for 39% of enrollment in 2016.
  • Premiums were relatively constant from 2015 to 2016 ($37 a month in 2016 versus $38 a month in 2015), although premiums vary widely across states, counties, and plan types.
  • In 2016, the average enrollee had an out-of-pocket limit of $5,223, which is nearly $1,000 higher than in 2011.
  • 31% of the Medicare population is enrolled in a Medicare Advantage plan. Total Medicare Advantage enrollment grew 5%, from 2015 to 2016. This reflects the influence of seniors aging on to Medicare and beneficiaries shifting from traditional Medicare to Medicare Advantage.
  • 64% of Medicare Advantage enrollees are in HMOs; 23% are in local PPOs; 7% are in regional PPOs; 1% are in private fee-for-service plans; and 4% are in other types of plans including cost plans and Medicare medical savings accounts.
  • Enrollment in private fee-for-service plans has declined slowly since the Medicare Improvements for Patients & Providers Act (MIPPA) of 2008. Under the law, in most parts of the country, private fee-for-service plans must have a provider network. About 1% of Medicare Advantage enrollees are in these plans. 26% of enrollees in private fee-for-service plans are in counties in which private fee-for-service plans are exempt from network requirements.
  • Medicare Advantage enrollment in California grew 6% from 2015 to 2016.
  • 44% of beneficiaries in Los Angeles County, California are enrolled in Medicare Advantage plans compared to only 11% of beneficiaries in Santa Cruz County, California.
  • The average MA prescription drug enrollee pays a monthly premium of about $37, which is 1% less than in 2015. Actual premiums are $28 a month for HMOs, $63 a month for local PPOs, and $76 a month for private fee-for-service plans. Average Medicare Advantage premiums for HMOs and local PPOs have decreased since the ACA was enacted while average premiums have increased for regional PPOs and private fee-for-service plans.
  • In 2016, 81% of Medicare beneficiaries had a choice of at least one zero premium MA prescription drug plan. From 2015 to 2016, the share of enrollees in zero premium MA prescription drug benefits remained relatively unchanged (48% in 2015 versus 49% in 2016). Fifty-nine percent of HMO enrollees are in zero premium plans; 38% are in regional PPOs; and 22% are in local PPOs. No zero premium private fee-for-service plans plans were offered in 2015 or 2016.
  • The average out-of-pocket limit for a MA prescription drug enrollee is $5,223, up from $5,041 in 2015 and $4,313 in 2011. The share of enrollees in plans with limits above $5,000 has greatly increased across all plan types. Fifty-two percent of enrollees are in plans with limits above $5,000 in 2016 compared to 46% in 2015. Thirty-seven percent of enrollees in 2016 are in plans with limits at the $6,700 maximum, compared to 32% in 2015 and 17% in 2011. Ninety-nine percent of regional PPO enrollees and 62% of local PPO enrollees are in plans with limits above $5,000 in 2016. In comparison, 45% of HMO enrollees are in plans with limits above $5,000 in 2016.
  • The standard Medicare Part D plan has a $360 drug deductible and 25% coinsurance up to an initial coverage limit of $3,310. That is followed by a coverage gap (the doughnut hole) in which beneficiaries pay a larger share until their total out-of-pocket Part D spending reaches $4,850. After exceeding this catastrophic threshold, beneficiaries pay 5% of the cost of drugs.
  • 95% of Kaiser Permanente’s enrollees are in HMOs. In contrast, enrollment in UnitedHealthcare and Humana plans is mostly in HMOs, but includes significant shares in local and regional PPOs. Humana’s distribution continues the shift from earlier years when a much larger share of Humana’s enrollees was in private fee-for-service plans plans. Enrollment in BCBS plans is split between HMOs (46%) and local PPOs (41%), with the remainder in regional PPOs and other plan types including private fee-for-service plans plans.
  • Kaiser Permanente’s presence is more geographically focused than other major national employers, with a heavy concentration in California, Colorado, the District of Columbia and Maryland.
  • Medicare Advantage enrollment could become more concentrated if Aetna’s acquisition of Humana and Anthem’s acquisition of Cigna are approved, particularly if few divestitures are required. If no divestitures are required in Aetna’s acquisition of Humana, the combined company would account for 25% of Medicare Advantage enrollment nationwide. UnitedHealthcare accounts for 21% of enrollment this year.
  • The Anthem’s acquisition of Cigna would have a less visible affect on the national Medicare Advantage market. Nationwide, Anthem accounts for 3% of Medicare Advantage enrollment and Cigna accounts for another 3%.
  • For many years, CMS has posted quality ratings for Medicare Advantage plans. In 2016, 68% of plans had four or more stars. In focus groups, seniors have said that they don’t use the star ratings to select a plan. Nonetheless, the star ratings may be correlated with factors that seniors do use to select their plan, including provider networks, and plan benefits and costs, and thus may be correlated with enrollment.
  • The Congressional Budget Office projects that about 41% of Medicare beneficiaries will be enrolled in Medicare Advantage in 2026. This growth may prompt some to question what it will mean if the preponderance of beneficiaries are in Medicare Advantage plans.

Medicare Advantage Versus Traditional Medicare

A report by the Kaiser Family Foundation reveals that Medicare HMOs perform better than traditional Medicare in providing preventive services and using resources more conservatively, at least through 2009. Two studies found that Medicare PPOs performed better than traditional Medicare on some metrics (particularly mammography rates). HMOs performed better than PPOs. These studies were conducted before changes made by the Affordable Care Act (ACA) to improve coverage of preventive services under traditional Medicare.

There is some evidence that relatively low cost-sharing (through Medicare HMOs or through Medicare with supplemental coverage), may result in earlier diagnoses of some cancers compared to traditional Medicare alone. Treatment patterns for some cancers may differ between Medicare HMOs and traditional Medicare, but studies do not show that it affects patient outcomes.

Medicare beneficiaries in HMOs are less likely to be hospitalized for a potentially avoidable admission than beneficiaries in traditional Medicare, according to six studies of beneficiaries represented by the Alliance of Community Health Plans (ACHP). Four of these studies rely on data before 2006, and reflect HMO experiences in mature markets. Performance varies substantially among Medicare Advantage plans, even among those of the same plan type. More established HMOs with integrated delivery systems tend to perform better.

On the other hand, beneficiaries rate traditional Medicare higher in quality and access, such as care and plan rating, though one study suggests that the difference may be narrowing for the average beneficiary. Traditional Medicare is much more popular among beneficiaries who are sick. It is not yet possible to assess performance after the implementation of the ACA’s Medicare Advantage payment changes. Except for hospice care, none of the 40 studies comparing Medicare Advantage to traditional Medicare rely on data from 2010 or later

CMS Undermines Medicare Advantage Chronic Care

CMS underestimates costs for people with multiple chronic conditions to the tune of  $2.6 billion annually, according to a study by Avalere. In the spring of 2015, CMS finalized changes to the risk adjustment system, targeting chronic disease prevention programs. These changes significantly limit health plans’ early intervention efforts and seniors’ benefits. Under the risk adjustment model, CMS substantially under-predicts expenditures for providing care to beneficiaries, including those with the following conditions:

  • Chronic kidney disease.
  • Osteoarthritis.
  • Rheumatoid arthritis.
  • Alzheimer’s disease and related conditions.

AHIP president and CEO Marilyn Tavenner said, “Further cuts to Medicare Advantage and seniors’ benefits are…at odds with…delivering better care and better value for beneficiaries. Rather than relying on an antiquated fee-for-service approach…, CMS should focus on strengthening Medicare Advantage and the innovative programs that improve seniors’ health.”

Last year, more than 340 members of Congress urged CMS to protect seniors’ coverage and provide stability to the program. Ahead of the upcoming February rate notice, more than 2 million seniors from AHIP’s Coalition for Medicare Choices have mobilized, urging Washington to defend the Medicare Advantage program from further payment cuts

Consumers Like Their Med Advantage Plans

Nearly half of Medicare Advantage members agree strongly that their health plan is a trusted partner in their health and wellness, according to a J.D. Power survey. Sixty-four percent say they have enough coverage for the care they need. Rick Johnson, director of the Healthcare Practice at J.D. Power said, “Medicare Advantage health plan members tend to have a more favorable image of their health plan than do members of commercial plans on brand measures of trustworthiness, affordability, reputation, and customer-centricity. Members pay more to move from Medicare to Medicare Advantage. The plans and the government do an excellent job demonstrating the value of the Medicare Advantage plan. Members say the money spent is worth it.”

One of the key benefits Medicare Advantage plans offer is the choice of primary care doctors, specialty doctors, and hospitals. Seventy-three percent of members say their doctors have not been dropped from their plan’s network during the past year, and 74% say that their hospitals have not been dropped

DMHC Approves Blue Shield’s Acquisition of Care 1st

The California Department of Managed Health Care (DMHC) approved Blue Shield of California’s acquisition of Care1st Health Plan. Blue Shield agreed to the following:

  • Invest $50 million to strengthen the Medi-Cal delivery system through programs that make finding information simpler for consumers and the public. These projects will help streamline information for plans, providers, consumers and the public.
  • Propose an industry approach to standardize encounter data submissions. Invite all California health plans to participate by December 15, 2016. The project will initially focus on Medi-Cal plans and providers.
  • Propose an approach to develop a statewide centralized provider directory. It would have a single portal for consumers to access information, for providers to access and update data, and for health plans to meet legal obligations regarding provider directories. Blue Shield will invite all California health plans to participate, including Medi-Cal managed care plans.
  • Give $140 million to the Blue Shield Foundation or other charitable organizations approved by the DMHC.
  • Give $10 million to local consumer assistance programs.
  • Improve its quality of care performance as measured by the Right Care Initiative and the Office of Patient Advocate Quality Report Card. Likewise, Care 1st agrees to improve its quality of care as measured by the Medi-Cal Managed Care Health Care Options Consumer Guide.
  • Improve the Care 1st network of contracted specialty providers and Care 1st’s enrollees’ access to specialty care. Blue Shield will also help Care 1st develop and maintain the Care 1st Medi-Cal network.

Care 1st agrees to ensure that Medi-Cal encounter data is submitted accurately and in a timely basis. Blue Shield and Care 1st agree to promote health literacy education and will file a plan with the Department specifying the programs for the Department to evaluate and approve prior to the plans initiating their participation.

Blue Shield announced in January 2015 that it had reached a $1.2 billion agreement to purchase Care 1st, a privately-held, for-profit health plan operating mostly Medi-Cal and Medicare business in Los Angeles and San Diego counties. Following the closing, Blue Shield will convert Care1st to a non-profit corporation. “This order brings Blue Shield into the Medi-Cal program and requires the plan to improve quality and access for Medi-Cal beneficiaries,” said DMHC director Shelley Rouillard.

“The Department’s approval includes commitments by Blue Shield that will improve the state’s health care delivery system, benefit consumers, and improve access in the Medi-Cal program. This includes $200 million in investments to strengthen the health care delivery system, particularly in Medi-Cal, and support consumer assistance programs. Blue Shield must also make improvements in the areas of health care quality and access.

“This agreement will provide important tools to standardize information about managed care and improve oversight of managed care services, for Medi-Cal members and all Californians,” said Jennifer Kent, Director of the California Department of Health Care Services (DHCS). DHCS administers the Medi-Cal program, which provides coverage to 12.5 million Californians, largely through managed care plans.

The Medicare Advantage Market in 2016

A total of 2,174 Medicare Advantage (MA) plans are in the market lineup for 2016, an increase of 90 plans over 2015, according to a report by Mark Farrah Associates. Researchers looked at data from Centers for Medicare & Medicaid Services (CMS). The Medicare market continues to be a key target for health insurance business with more than 17.6 million beneficiaries enrolled in a Medicare Advantage plan and another 37 million eligible.

Many Medicare Advantage plans are designed to be marketed in targeted regions while others are approved to be offered nationwide. For 2016, HMOs continue to be the dominant plan type; comprising 67% of plan offerings. The number of distinct HMO plans will increase to 1,463 for 2016.

2016 Medicare Advantage Preview

MA Plan Type 2015 Plan Count 2016 Plan Count 2016 %
HMO 1,358 1463 67%
Local PPO 521 516 24%
Cost 86 81 4%
PFFS 69 63 3%
Regional PPO 43 47 2%
MSA 7 4 0%
Total 2,084 2,174 100%
Source: Mark Farrah Associates.

Open enrollment will begin on October 15, 2015, and competitors are gearing up to promote 2016 benefit plans. As Medicare companies finalize sales and marketing strategies, they look forward to the release of the Medicare Plan Finder data on or around October 1. The Plan Finder is an online tool that helps seniors shop select new Medicare plans. It is also a rich market analysis resource for the industry. Analysts within Medicare plans use the detailed benefit attributes including benefit copays and cost sharing, plan by plan, to assess competition and opportunity, county by county.

Medicare Advantage Premiums Remain Stable; Enrollment at All-Time High

The Centers for Medicare & Medicaid Services (CMS) announced that Medicare Advantage premiums will remain stable and more enrollees will have access to higher quality plans while enrollment is projected to increase to an all-time high. In addition, CMS released today new information that shows that millions of seniors and people with disabilities with Medicare continue to enjoy prescription drug discounts and affordable benefits as a result of the Affordable Care Act. Today’s announcement comes as CMS releases the premiums and costs for Medicare health and drug plans for the 2016 calendar year.

CMS estimates that the average Medicare Advantage premium will decrease by $0.31 next year, from $32.91, on average, in 2015 to $32.60 in 2016. Fifty-nine percent of Medicare Advantage enrollees will face no premium increase.

Sean Cavanaugh of CMS said, “Seniors and people with disabilities continue to experience stable premiums in Medicare health and drug plans while benefiting from a transparent and competitive marketplace. Medicare Advantage and prescription drug plans remain affordable and provide high quality care.”

Access to the Medicare Advantage program will remain strong, with 99% of beneficiaries having access to a plan. In addition, in 2016, more Medicare Advantage plans will offer supplemental benefits for enrollees, such as dental, vision, and hearing benefits. From 2010, when the Affordable Care Act was enacted, and 2016, premiums are expected to decrease by nearly 10% and enrollment is projected to increase by more than 50% to approximately 17.4 million enrollees, which is about 32% of the Medicare population. At the same time, beneficiaries are receiving higher quality care. About 65% of Medicare Advantage enrollees are enrolled in plans with four or more stars for 2016, a significant increase from 17% of enrollees in such plans in 2009.

Premiums in the Medicare Prescription Drug Program (Part D) will also be stable next year. Earlier this year, CMS announced that the average basic Medicare prescription drug plan premium in 2016 is projected to remain stable at $32.50 per month. Because of the Affordable Care Act, people with Medicare are seeing reduced costs through savings on covered brand-name and generic drugs and access to certain preventive services at no cost sharing. Since the passage of the Affordable Care Act, which closes the prescription drug donut hole over time, more than 9.8 million people with Medicare have saved over $17.6 billion on prescription drugs through July 2015 as a result of the discounts in the donut hole and rebates in 2010, for an average of $1,796 per beneficiary.

Quality in Part D continues to be strong, with close to 50% of prescription drug plans receiving four or more stars. These plans serve about one-third of prescription drug plan enrollees, compared to 27% of enrollees in plans with four or more stars in 2009. CMS calculates star ratings from one to five (with five being the best) based on quality and performance for Medicare health and drug plans to help beneficiaries, their families, and caregivers compare plans.

The annual election period for Medicare health and drug plans begins on October 15, 2015 and ends December 7, 2015. Plan costs and covered benefits can change from year-to-year

Last Updated 05/25/2022

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