Medicare Advantage
Background
Older adults and people with disabilities receive Medicare benefits one of two ways: 1) through original Medicare, which pays health care providers largely on a fee-for-service basis; or 2) through Medicare Advantage (MA), in which Medicare pays private health plans to provide benefits. (For more on who is eligible for Medicare and what services it covers, click here or here.)
Beneficiaries who use original Medicare can seek care from any health care provider that accepts Medicare payment rates. However, original Medicare can be expensive for beneficiaries because they must pay cost sharing (e.g., 20 percent coinsurance for most physician services) and there is no limit on their out-of-pocket costs. Most beneficiaries who use original Medicare have private Medicare supplemental (Medigap) insurance, retiree health coverage, or Medicaid-run Medicare Saving Programs that help pay some or all of Medicare’s cost sharing.
For several decades, the Medicare program has included private health plans as an alternative to original Medicare. These MA plans offer nearly the same Medicare benefits as well as some additional benefits not covered by Medicare (typically limited dental, vision, or hearing). They also limit the out-of-pocket costs that enrollees must pay. In exchange, enrollees face more limitations, such as requirements to see providers that are in the plan’s network and the need for prior authorizations and referrals. Most Medicare beneficiaries have an extensive choice among MA plan options available in their county of residence. In 2025, the average Medicare beneficiary has a choice of 34 MA plans that offer drug benefits or 42 MA plans with or without drug benefits.
In this compendium, we grouped Medicare Advantage proposals into 12 categories. One category relates to the existence of the MA program. Six categories include proposals that would make changes to how Medicare pays MA plans and how plans use those payments: Benchmarks for plan payments, competitive bidding, premium support, risk adjustment, quality bonus program and star ratings, supplemental benefits and rebates. Three categories address proposals related to how Medicare beneficiaries choose among MA plan options and the ways in which plans manage care (beneficiary choice, utilization management, plan networks and benefits coverage). Two other categories include proposals for employer-sponsored group waiver (EGWP) plans and CMS’s collection of encounter data from MA plans.
Using the Compendium
- Click on a button below to see a set of policy proposals to address each of these categories of issues related to the Medicare Advantage program.
- Once selecting the category, the list of relevant proposals is displayed. The entry for each proposal includes a brief description, the author or organization making the proposal, anticipated cost or savings when available, and its anticipated effects on beneficiaries and other stakeholders.
- Click on the Details button for any proposal to see a longer description of the content, more detailed information on the proposal’s authors, and additional information about cost or savings, impacts on key stakeholders, and factors to which effects of the proposal may be sensitive.
- The detailed display also contains a link to original source material that presents the proposal.