Medicare Advantage – 5 Reasons To Stay Away

Medicare Advantage plans are sold by private insurance companies like Humana, United Healthcare, Aetna, Blue Cross Blue Shield, and many more. They are bundled Medicare plans that completely replace your Original Medicare Part A and Part B benefits. They work very differently than Medicare Supplement Plans, which work to supplement your Original Medicare benefits. When it comes to the core medical services provided by Medicare Part A and Part B, Medicare Advantage plans must, at a minimum, offer the same benefits, but they can add additional benefits (more on that later). There are several types of Medicare Advantage plans available, including:

  • Health maintenance organization (HMO) plans
  • Health maintenance organization, Point-Of-Service Plans (HMO-POS)
  • Preferred provider organization (PPO) plansDoctor and Hospital Network
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1) Medicare Advantage Plans have Networks of Physicians and Hospitals you MUST use

The one common theme to all of the Medicare Advantage plans listed above is that they have a defined network of hospitals,  physicians, and other health care workers and facilities that you must use. While PPO plans allow you to go out of network to receive services the out-of-pocket costs of doing so can be significantly higher than if you stay in the network.

This is very different from how Original Medicare and Medicare Supplements work. If you are enrolled in Original Medicare Part A and Part B or if you have a Medicare Supplement to enhance those benefits, there are no defined networks you must stay within. You can go to any doctor or other healthcare practitioner, hospital, outpatient, or other facilities as long as they accept Medicare, which most in the country do. This gives you much more flexibility than Medicare Advantage if you are traveling or want to see a specialist in another area or state if you have a condition that may require you to seek specialized care.

2) Drawbacks of Primary Care Physicians and the Referral Process

If you enroll in an HMO or HMO-POS Medicare Advantage plan, in addition to the requirement that all services except urgent or emergency care are received from in-network doctors and hospitals, you also have to select a Primary Care Physician that is responsible for managing your care. If you want to see a specialist, you will have to see your PCP first and get a referral from them to see the specialist, or the care will not be covered, and you will have to pay for it entirely out of your pocket. If you are enrolled in Original Medicare or have a Medicare Supplement, you never have to worry about specialist referrals. You can see any doctor anytime you want as long as they accept Medicare.

Having to get a referral to see a specialist is by far the biggest complaint from those with a Medicare Advantage Plan.
Keith Armbrecht
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3) Higher out-of-pocket costs

With Medicare Advantage plans, the premiums can, in some cases, be low, but your out-of-pocket cost will generally be higher than if you have a Medicare Supplement plan. Out-of-pocket costs include the following:

  • Medical copays
  • Medical coinsurance
  • Medical annual deductibles
  • Increased out-of-pocket costs if you go out of network with PPO or HMO-POS plans
  • Part-D prescription drug deductible, copays, and coinsurance (all separate from Medical)
  • Costs if you pay a late enrollment penalty

With Medicare Advantage, your plan will have a Maximum Out-Of-Pocket (MOOP) limit. If you are enrolled in a PPO, your plan will set two MOOPS’s, one for in-network costs and another for a combination of in-network and out-of-network costs. In 2021, the maximum allowable MOOP for Medicare Advantage Plans is $7,550, which is a significant amount to potentially pay out of your pocket.

If you choose to buy a Medicare Supplement plan (depending on the plan), you can reduce or eliminate your out-of-pocket costs (with the exception of the Part B deductible of $203). For example, suppose you enroll in a Medicare Supplement Plan G. In this case, it will cover all of the copays and coinsurance you would be responsible for if you were enrolled in Original Medicare Part A and Part B only. You would only be left with the Part B deductible of $203 to pay out-of-pocket for medical expenses

4) You Will Still Have to Pay your Part B Premium

Another common misconception when it comes to Medicare Advantage is that it is truly an all in one plan, and you have no other costs. That is not the case. You will still have to pay your Part B premium in addition to your Medicare Advantage premium. If your income is over $87,000 as an individual or $174,000 if filing jointly, you will also have to pay the Income Related Monthly Adjustment Amount (IRMAA) for the income bracket you are in, which means your Part B premium will be more than the standard $148.50.

5) Medical Management Rules

One of the other things you will have to deal with if you enroll in a Medicare Advantage plan are medical management rules. Medical management rules are rules that the Medicare Advantage insurance companies put in place to help control costs. These rules have several names, so you may hear them called prior plan approval prior review), prior authorization, prospective review, or certification. These programs are in place so that the Medicare Advantage insurance company can review certain services’ necessities. They are used to review the services your doctor feels you need against certain healthcare management guidelines for behavioral health, medical services, and medications before the services are provided to determine if they will be approved or not. Services like inpatient admissions, outpatient services, home health services, and prescription medications may be subject to prior authorization by the Medicare Advantage plan. These reviews are done to confirm one or more of the following:

  • Member eligibility
  • Benefit coverage
  • Compliance with Medicare medical policy regarding medical necessity (do they think you really need it)
  • Appropriateness of setting (Inpatient Vs. Outpatient)
  • Requirements for utilization of in-network and out-of-network facilities (hospitals, outpatient facilities, etc.) and health care professionals (doctors, nurses, etc.)
  • Identification of comorbidities (multiple health issues) that may require specific discharge needs.
  • Situations that may require you be referred to the chronic disease case management department

Some of the services and other things that typically require prior-authorization include durable medical equipment, diagnostic imaging (MRI, CT, PET, and nuclear medicine), skilled nursing facility admissions, oncology programs, and prescription drugs.

Medicare Advantage Vs. Medicare Supplement

Let’s take a look at the costs for both Medicare Advantage and Medicare Supplement plans.

Medicare Supplement

Medicare Advantage

Must Pay Part B Premium

Must Pay Part B Premium

Choose Any Doctor

Network of Doctors

Choose Any Hospital

Network of Hospitals

High Level of Member Satisfaction

Referrals for Specialists May Be Needed

Monthly Premium Generally Higher

Low Monthly Premium

Low Out of Pocket Cost

Higher Out of Pocket Cost

Few if Any Medical Management Prior Authorizations required

Many Medical Management Prior Authorizations required

In summary, while there are some positive aspects of Medicare Advantage programs, there are also quite a few drawbacks. In this article, we have reviewed the top 5 reasons to stay away from Medicare Advantage.


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