Medicare is a health insurance program primarily for individuals aged 65 or older, though it also covers certain younger people with specific disabilities or end-stage kidney disease. Original Medicare, composed of Part A (Hospital Insurance) and Part B (Medical Insurance), provides foundational coverage. The Medicare Managed Care Plan offers beneficiaries an alternative structure for accessing and managing these healthcare services.
Defining Medicare Managed Care (Part C)
Medicare Managed Care is officially known as Medicare Part C, or Medicare Advantage. These plans are offered by private insurance companies that the Centers for Medicare & Medicaid Services (CMS) approves and contracts with. When an eligible person chooses to enroll in a Part C plan, they receive their Part A and Part B benefits directly through that private insurer. The government pays a fixed amount to the private companies for the care of these beneficiaries, transferring the responsibility for coverage administration.
How Managed Care Plans Function
Managed Care Plans operate by structuring how and where a beneficiary can receive medical attention, primarily through provider networks. The two most common structural models are the Health Maintenance Organization (HMO) and the Preferred Provider Organization (PPO).
HMO plans generally require members to use doctors, hospitals, and specialists who are within the plan’s specific network, except in cases of emergency care. These plans typically require a referral from a primary care physician before a member can see a specialist.
PPO plans offer more flexibility compared to HMOs, allowing members to see providers both inside and outside of the plan’s network. While members can access out-of-network services, the costs for these services are usually higher than those received from in-network providers. Both plan types utilize mechanisms like prior authorization, requiring plan approval before certain services or medications are covered. Coverage is also typically restricted to a specific geographic service area.
Comprehensive Coverage and Added Benefits
By law, every Medicare Advantage plan must cover all the services and items that Original Medicare Parts A and B cover. The only exception to this requirement is hospice care, which continues to be covered directly through Original Medicare Part A. A significant advantage of many Medicare Advantage offerings is the integration of prescription drug coverage, commonly referred to as Part D.
Plans that combine medical and prescription drug benefits are known as Medicare Advantage Prescription Drug (MAPD) plans. Many private plans offer supplemental benefits that Original Medicare does not cover. These extra services frequently include routine dental care, coverage for eyeglasses and contacts, and hearing aids. Wellness programs, such as gym memberships or health education classes, are also common additions.
Key Differences from Original Medicare
The fundamental distinction between Original Medicare and a Managed Care Plan lies in the choice of healthcare providers. Original Medicare allows beneficiaries to see almost any doctor or specialist in the United States who accepts Medicare. Conversely, Medicare Advantage plans often restrict choice through their use of networks, particularly in the HMO structure.
Financial Protection and Care Coordination
Original Medicare requires the beneficiary to pay deductibles and coinsurance, but it does not have an annual limit on out-of-pocket spending. Managed Care plans, however, are required to have a maximum out-of-pocket (MOOP) limit, which provides a cap on how much a member must pay for Part A and B services in a calendar year. Many Managed Care plans also require the selection of a primary care physician (PCP) to coordinate care, a requirement that does not exist in the Original Medicare framework.
Enrollment Periods and Eligibility
To be eligible to enroll in a Medicare Managed Care Plan, an individual must be enrolled in both Medicare Part A and Part B, and reside within the plan’s specific service area. Enrollment and switching between plans are generally restricted to specific windows throughout the year. The Initial Enrollment Period (IEP) is the first opportunity for a person to enroll when they first become eligible for Medicare.
The Annual Enrollment Period (AEP), which runs from October 15th through December 7th each year, allows all beneficiaries to join, switch, or drop a Medicare Advantage plan. The Medicare Advantage Open Enrollment Period (MA OEP), from January 1st to March 31st, allows those already enrolled in a Medicare Advantage plan to switch to a different Medicare Advantage plan or return to Original Medicare.