Medicare Advantage: Enrollment Increased from 2010 to 2011 while Premiums Decreased and Benefit Packages Were Stable

Enrollment and spending in Medicare Advantage (MA) plans--the private plan alternative to the Medicare fee-for- service (FFS) program--have more than doubled since 2004. MA plans generally receive larger payments from Medicare than what these plans would require to provide the original Medicare FFS benefit package. Plans must use this additional money to reduce cost sharing, reduce premiums, and offer additional benefits. The Patient Protection and Affordable Care Act, enacted in 2010, required that the Centers for Medicare & Medicaid Services (CMS)--the agency within the Department of Health and Human Services (HHS) that administers Medicare--make changes in how Medicare pays MA plans. These changes, once fully implemented, are expected to reduce MA enrollment and payments, and lead to less generous benefit packages. GAO was asked to examine trends in MA from 2010 to 2011. This study assesses the extent to which the following changed from 2010 to 2011: (1) MA enrollment, (2) MA premiums and cost-sharing requirements, and (3) the additional benefits offered by MA plans. GAO analyzed data for the most common types of MA plans, accounting for about 71 percent of both the 11.1 million MA beneficiaries in April 2010 and the 11.8 million MA beneficiaries in April 2011. GAO used MA enrollment data to identify enrollment trends. GAO also analyzed data on MA plans' projected revenue requirements and benefit packages. GAO assessed the reliability of the data by interviewing CMS officials, conducting logic tests, and comparing results to published sources.