Quality issues keep dogging Medicare Advantage plans

Seniors have flocked to Medicare Advantage in recent years, attracted by savings on premiums and the convenience of one-stop shopping. But as the annual Medicare enrollment season began this week, a memorandum from federal officials to plan providers surfaced that serves as a big red warning flag.

The upshot: Assess the quality of any Advantage plan before you sign up.

The memorandum, first reported by the New York Times, described ongoing compliance problems uncovered in federal audits of Advantage and prescription drug plans. These include inadequate rationales for denial of coverage, failure to consider clinical information from doctors and failure to notify patients of their rights to appeal decisions. The audits also uncovered problems with inappropriate rejection of prescription drug claims.

Advantage is a managed care alternative to traditional fee-for-service Medicare. It rolls together coverage for hospitalization, outpatient services and, usually, prescription drugs. Advantage plans also cap your out-of-pocket expenses, making Medigap supplemental plans unnecessary. The savings can be substantial. Medigap plan premiums can cost $200 monthly or more, and stand-alone drug plans will average $39 a month next year.

Advantage plans are subject to strict rules and regulations, and must cover all services offered in original Medicare, with the exception of hospice services. Some offer extra coverage, such as vision, hearing, dental and wellness programs.

And there is evidence that the quality of these plans is rising. But consumer advocates say the latest warnings about Advantage plan quality underscores the need for Medicare enrollees to restrict their shopping this fall to four- and five-rated plans, of which plenty are available in most parts of the country.

They also urge checking to make sure health providers you want to see are in a plan’s network, and to make sure to examine the prescription drug “formularies” in your plan – the rules under which your medications are covered. For anyone experiencing problems with claims, it’s important to understand your rights to file an appeal. You can find general information on Medicare appeals here, and more specific guidance on appealing an Advantage claim here.

Learn more about quality issues in the Medicare Advantage program in my column this week at Reuters Money.