Mrs. Cassidy slowly walks into my office one busy afternoon. Mrs. Cassidy has some serious style. She is wearing a deep orange dress with a bright blue blazer. There aren’t too many folks that can pull that outfit off, but she can. She has a wide slow smile, and she speaks with a slow southern drawl that belies her southern roots.

This was supposed to be a routine follow up visit for a 67 year old woman with a history of a mechanical mitral valve replacement and coronary disease. Unfortunately, she tells me a story that is concerning for angina. I think she needs a stress test. I quickly look at her insurance, and I let out a somewhat audible groan. She has a Medicare Advantage (MA) plan. I explain to Mrs. Cassidy that we will need to go through an extra step to pre-certify her stress test. She expresses surprise and asks me what she should do. I will tell you what I told her, but first, let me tell you why.


Medicare Advantage plans: A brief history

Medicare Advantage plans represent the federal government’s experiment with delivering care to seniors through private insurance companies. The experiment started as an alternative to the pay-for-whatever-the-doctor-orders model of traditional medicare. Traditional medicare is fee-for-service, which means there are payments made for any and all services delivered.

If I think a patient needs a stress test, the patient just goes and gets the questions asked. This can lead to some perverse incentives and results in a lot of services being delivered. Like the parent that abdicates the responsibility of disciplining their child to a reform school, the federal government hoped private insurance companies would mete out the tough love needed to reign in costs. Tough love meant I was going to have to get ‘permission’ from the insurance company to do a stress test on Mrs. Cassidy. If my staff was unable to get the test authorized with the information I gave them, I would have to get on the phone with an insurance company physician to plead my case. This seems like a win for the federal government from a cost standpoint. Surprisingly, it’s not.

The federal government pays private insurance companies a fixed amount for each enrollee in their plan. In the beginning (prior to 1997), the federal government would pay 95% of what they would have paid had a patient enrolled in traditional Medicare. This saved the government money, but resulted in MA plans making up only 13% of the total Medicare market. In an effort to expand access and have more people enrolled in MA plans, the federal government increased reimbursement to MA plans in 2003 in a bill best known for introducing Medicare prescription drug coverage.

Enrollees in MA plans now cost the taxpayer $1000 more than if the patient had stayed in traditional Medicare, and enrollment in MA plans has risen rapidly to cover almost 30% of all Medicare eligible seniors.

medicare advantage plan

The government has been active in trying to rectify the payment asymmetry by tying reimbursement to risk scores and value. This has not proven to be without its problems.


Scoring risk: You are higher risk if they say you are

In 2004, the Medicare program began to tie payments to private plans to beneficiary risk score. Risk scores are based on diagnoses coded during the year prior to the payment year. Insurance companies responded by investing resources in ensuring ‘appropriate’ coding. The patients didn’t change. But if the patient enrolled in a MA plan, they became higher risk. The evidence clearly showed insurers were upcoding to raise payments.


Measuring value: Harder than it sounds.

Payments were also tied to value-based payments to reward MA plans that provided high quality care. Quality in the MA program is graded on a 5 star scale that is determined from a weighted scale comprised of variables that include adherence to best practice processes (adults should get flu shots) and outcomes.

An example of an outcome measure is blood pressure targets. In 2010, the MEDPAC report on quality used blood pressures 130/80 in diabetics as an outcome measure. Unfortunately, 2010 was also the same year that the ACCORD trial examining aggressive blood pressure targets in diabetics was released; targeting a systolic blood pressure target of 120mmHg compared to 140mmHg did not reduce the composite endpoint of fatal/non-fatal cardiovascular events. The world of hypertension was so spooked by this trial that the panel convened to create a national guideline using this trial as evidence that lower was not always better when it came to blood pressure. So it is entirely possible, that in 2010, 5 star plans were those plans that did harm to diabetic patients by having lower blood pressure targets.

medicare advantage plan

In brief, the federal government’s experiment in risk-adjusted, value-based payments to private insurance companies has only served to shift health care dollars to insurance companies at increased cost to the taxpayer.

Between January 1st and February 14th each year, if you happen to be enrolled in a Medicare Advantage plan, you can leave your plan and return to original Medicare. John F Kennedy famously said, “Ask not what your country can do for you, ask what you can do for your country”. Mrs. Cassidy, do what’s right for your country. Choose traditional Medicare.

Anish Koka, MD
Anish Koka MD is a cardiologist in private practice in Philadelphia. He did his medical residency at Temple University in Philadelphia, and completed a cardiology fellowship at Thomas Jefferson University in Philadelphia. He has been in solo practice since 2013, and enjoys being on the front lines of patient care. He has always had an interest in health care policy and how it effects the delivery of care on a day to day basis. His musings on health care can be found on


  1. Thank you Doctor for your analysis. My Medicare clients want choice of doctor and treatment anywhere in the United States. The insurance industry wants lack of choice of doctors, using a profit driven model to put the patient between the insurance company and their doctor by promoting HMO plans in their T.V. advertising.

    The total Advantage membership is now 64% of the 17 million beneficiaries now enrolled in the Medicare Advantage program, and a recent study shows that only HMO plans in highly populated areas can save more money than Traditional Medicare, but the patient gives up choice.

    The other Advantage PPO’s in all parts of the country cost the Federal government more money than Traditional Medicare.

    Wendell Potter, a former Cigna executive and whistle blower has confirmed all that you say about up coding and risk scores by the insurance companies to game the system to maintain their profits and keep their stockholders happy. Doubters can go the Center for Public Integrity website and read about billions in overpayments to the insurance companies offering Advantage plans.

    Not one of my clients ,who now number more than 500 Medicare beneficiaries want an HMO or permission slip to see specialists. My first question to a prospective Medicare member is , “Would you want to go to Mayo Clinic if needed?” The answers is usually yes. Then I break the news that Mayos does not accept Medicare Advantage plans.

    There is a much better option than Advantage with a high deductible Medicare Plan F supplement and I have shown clients how to save about $10,000 in premiums over a ten year period without any risk since the savings will offset the $2,180 maximum co-pay per calendar year after Medicare pays first dollar coverage of 80%. Advantage plan risks are in the $5,000 to $6700 per year category. Few read the fine print and realize a major medical episode could be costly if they had to come up with the $6700.

    All I do is work with Medicare clients and your advice is 100% accurate to think twice before joining a Medicare Advantage plan. Very few even know there is another and better option with the high deductible supplement plans. Thanks again for helping your patients understand the risks of going the Advantage route.

  2. Civisissus and d.b., if you prefer your insurance company rather than your physician t to decide whether you should have a stress test or determine which medication you may take, please continue with your Medicare advantage plan. There apparently no question in your mind that insurance companies should practice medicine and are only interested in your well being.

  3. ” So while it may in certain instances be better for the citizens to join an MA plan, not the best thing fiscally for the country.”

    Well, we’ve looked at Medicare Advantage plans mostly from a physician’s point of view. Now let’s look at it from the health plan member’s – the “consumer’s” – POV.

    Medicare: confusing & separate deductibles for hospital care and “other stuff” (like physician visits), coinsurance – and no coverage for “normal” prescriptions, meaning I have to go buy “standalone” prescription coverage, get a second coverage ID card, arrange separate premium payment, deal with multiple customer service people, etc

    Medicare Advantage: one comprehensive plan design, one customer service number, Rx are integrated, one place to pay.

    For the majority of covered Medicare-eligible people, whose main concern is whether Silver Sneakers is included in the benefits extras, an incidental level of confirmation for a proposed therapy regimen is a negligible annoyance.

    For a physician, concerned principally with treating the minority of his patients who have significant chronic health issues, inflexibility is more than an annoyance. But that’s misunderstanding the environment within which his/her concerns are relevant.

    Not the best thing fiscally for the country? Perhaps not yet Dr. Koka. But SOME more systematic way of financing needed health treatment, that conforms in acceptable ways with what most people have come to accept as effective if not attractive commercial service practices, is probably going to continue to be pursued, despite the protests of inconvenienced clinicians. Because in the final analysis, health care is not about you, Dr. Koka.

    • I agree with you, but this isn’t just about what inconveniences me. We do need to find a better way since what we pay for healthcare and where we are going isn’t sustainable. Partly why I was careful in my response and commentary in saying that at the moment Medicare advantage plans aren’t a great deal. I do support continued experimentation to figure this out. My commentary on risk and value shouldn’t imply I don’t believe in it, just that its hard and we need to keep working to figure out the best way.
      On the other hand, I do think its my/our responsibility to point out when there is a disconnect between the intent of a policy (almost always good) and its effect. The Medicare advantage experiment was set up to test the idea that the private markets could do it better… I’m just pointing out that isn’t the case here. In its current iteration it is more expensive, and I’m not clear that the Mrs. Cassidy’s of the world are getting better value. The silver sneakers program can cynically be looked at as an exercise in attracting a lower risk population into MA plans.

  4. I’m sorry you are upset by the article.
    The cost data comes from MEDPAC. That’s the medicare advisory
    committee that makes yearly recommendation. It is a fact that the
    govt. pays more per medicare advantage enrolle than for traditional
    medicare. MEDPAC has again most recently recommended reducing this
    overpayment. The figure on overpayment comes from from MEDPAC. The
    risk scoring upcoding is from a paper that is linked to in the
    article. Just trying to point out that MA plans are more costly to
    the taxpayer…and that risk scoring/value based payment is tricky.
    As we move forward to a more sensible health care model, understanding
    the lessons/pitfalls seen with MA plans regarding risk scoring/value
    based payment is crucial. Lastly, I don’t see this as a
    liberal/conservative issue at all…just a problem in need of a
    solution. By the way, I’ll love Mrs. Cassidy (not her real name)
    regardless of which plan she chooses! :)

  5. Sorry the article made you so angry. The data presented is not 10 years old, the overpayment info comes from medpac (that’s the govt. Medicare advisory committee) and even the last year reported on the figure is from 2009.. It is a fact that each enrollee in part c or med advantage is more costly than traditional Medicare.. Which is why the most recent medpac recommendation continues to recommend reducing these payments. The ACA passed in 2010 also noted this.

    It’s certainly your choice to continue in an MA plan, just pointing out that at the moment it’s more expensive to do that.

    It’s also a nice attempt at risk scoring/value based payment.. I was trying to point out how difficult that can be. As we move towards that payment model the med advantage experience should offer us some important lessons.

    I don’t see this as a liberal/conservative issue.. Just a problem that needs to be addressed.

  6. this is typical doctor-lobby ignorance/propaganda on multiple levels. Why are you a member of a Medicare Advantage insurance plan if you hate those of us who are so much that you put out all this bad information. I hope the insurer kicks you out so you can no further harm to patients. In addition what you say about the cost of public Part C health plans to the Trust funds is totally a lie. And that is not even mentioning that the crap in this article about cost is 10 years old. Read the trustees reports and not this nonsense left wing academic bullshit

    • I’m sorry you’re upset by the article. The cost data comes from MEDPAC (Medicare advisory committee). The MEDPAC 2014 report continues to recommend reducing overpayment to medicare advantage (part c) plans. It is a fact that each enrollee in medicare advantage plans costs the govt. more than traditional medicare. It’s a free country, you can choose whatever plan you like. I was just pointing out that medicare advantage is more expensive to the taxpayer at the moment. I also was trying to point out that risk adjusted value based payments is difficult. Everyone wants to get there, but the details are important. The Medicare Advantage story offers important lessons in the pitfalls of risk scoring and measuring value as we move forward to a hopefully more sensible medical world.

      I don’t think there’s a liberal/conservative viewpoint here…just pointing out problems that need to be refined. I’m just a private practice guy trying to take care of patients. And by the way I’ll love Mrs Cassidy (not her real name) even if she stays in her MA plan. :)

  7. Very true Pat. It is a very individual experience. From a macro perspective, though, regardless of how well run your MA plan is, the taxpayer is being taken to the cleaners with MA plans. The whole premise was that MA plans would save us money turns out not to be true. So while it may in certain instances be better for the citizens to join an MA plan, not the best thing fiscally for the country.

  8. It is important to remember that it is the Health Plan that determines the hassle factor of Medicare Advantage. Some plans have made it a pain in the neck for both docs and patients as Anish describes and others, like my Medicare Advantage Plan with Kaiser Permanente Northern California have made the MA experience much easier and more pleasant than traditional Medicare. You need to ask your doctor, your insurance broker, and your Medicare enrolled friends questions about the MA plans available to you before deciding what option is best for you.

    Are you or a loved one in a Medicare Advantage plan? If so, we would love to hear your experience.


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