	Introduction

Medicare Advantage (MA) is an alternative way for Medicare beneficiaries to receive covered benefits. Under MA, private health plans are paid a per-person amount to provide all Medicare covered benefits (except hospice) to beneficiaries who enroll in their plan. Eligible individuals may enroll in an MA plan, if one is available in their area. As of January 2009, all Medicare beneficiaries had access to an MA plan and 23% of beneficiaries enrolled in one. Private plans may use different techniques to influence the medical care used by enrollees. Some plans, such as health maintenance organizations (HMOs) may require enrollees to receive care from a restricted network of medical providers; enrollees may be required to see a primary care physician who will coordinate their care and refer them to specialists as necessary. Other types of private plans, such as private fee-for-service (PFFS) plans, may look more like original Medicare, with fewer restrictions on the providers an enrollee can see and minimal coordination of care. In general, Medicare Advantage plans offer additional benefits or require smaller co-payments or deductibles than original Medicare. Sometimes beneficiaries pay for these additional benefits through a higher monthly premium, but sometimes they are financed through plan savings. The extent of extra benefits and reduced cost sharing vary by plan type and geography, creating an inequity that can frustrate some beneficiaries. However, Medicare Advantage plans are seen by some as an attractive alternative to more expensive supplemental insurance policies found in the private market. The 111 th Congress may examine several aspects of the MA program. Though a portion of the higher expenditure results in extra benefits and reduced cost sharing for some enrollees, some argue that private plans should not be paid more than the cost of original Medicare. Second, starting in 2010, the Comparative Cost Adjustment (CCA) Program will test direct competition between MA and original Medicare in selected areas. As such, the Part B premiums of beneficiaries in original Medicare may be increased or decreased depending on the efficiency of original Medicare relative to MA plans in the area. Third, recent studies show that profits in 2005 and 2006 for MA plans were, on average, higher than estimated because of underestimates in medical spending. If plans had more accurately estimated medical spending, they could have offered more generous benefit packages without reducing their profits, though some variability in the accuracy of estimates may be expected. Finally, marketing behaviors of MA plans and their agents or brokers were a concern in the 110 th Congress; it is unclear whether they will continue to be an issue in the 111 th . The Congressional Budget Office (CBO) March 2008 projection of Medicare payments under Part C is $112.8 billion in 2009 for coverage of 11.0 million enrollees, increasing to $221.2 billion in 2018 for 16.6 billion enrollees. According to the Medicare Payment Advisory Commission (MEDPAC), Medicare is expected to pay private plans an average of 14% more per beneficiary in 2009 than it does for beneficiaries enrolled in the original Medicare program. Per Beneficiary Expenditure Differences Between MA and Original Medicare

Medicare-managed care plans may have the potential to provide better quality care at less cost than original Medicare.
Medicare Advantage (MA) is an alternative way for Medicare beneficiaries to receive covered benefits. Under MA, private health plans are paid a per-person amount to provide all Medicare-covered benefits (except hospice) to beneficiaries who enroll in their plan. Eligible individuals may enroll in an MA plan, if one is available in their area. As of January 2009, all Medicare beneficiaries had access to an MA plan and 23% of beneficiaries enrolled in one. Private plans may use different techniques to influence the medical care used by enrollees. Some plans, such as health maintenance organizations (HMOs) may require enrollees to receive care from a restricted network of medical providers; enrollees may be required to see a primary care physician who will coordinate their care and refer them to specialists as necessary. Other types of private plans, such as private fee-for-service (PFFS) plans, may look more like original Medicare, with fewer restrictions on the providers an enrollee can see and minimal coordination of care.
In general, Medicare Advantage plans offer additional benefits or require smaller co-payments or deductibles than original Medicare. Sometimes beneficiaries pay for these additional benefits through a higher monthly premium, but sometimes they are financed through plan savings. The extent of extra benefits and reduced cost sharing vary by plan type and geography, creating an inequity that can frustrate some beneficiaries. However, Medicare Advantage plans are seen by some as an attractive alternative to more expensive supplemental insurance policies found in the private market.
Though plans that manage their enrollees' care have the potential to be less expensive than original Medicare, recent analyses by the Medicare Payment Advisory Commission (MEDPAC) find that Medicare is projected to pay private plans an average of 14% more per beneficiary in 2009 than it does for beneficiaries in the original Medicare program. While some support the higher Medicare expenditures for MA enrollees because funds are used to provide reduced cost sharing or additional benefits, others support paying private plans no more than the cost of covered benefits under the original Medicare program, which may result in less generous MA benefit packages, or reduced access to MA plans. With competing health expenditure priorities, Congress is likely to examine the MA program.
Congress may consider additional issues. First, the Comparative Cost Adjustment (CCA) Program is slated to start in 2010. CCA is designed to test direct competition between MA and original Medicare. As such, the Part B premiums of beneficiaries in original Medicare may be increased or decreased depending on the efficiency of original Medicare relative to MA plans in the area. Second, recent studies show that profits in 2005 and 2006 for MA plans were, on average, higher than estimated because of underestimates in medical spending. If plans had more accurately estimated future medical spending, they could have offered more generous benefit packages without reducing their profits, though some variability in the accuracy of estimates may be expected. Third, marketing behaviors of MA plans and their agents or brokers were a concern in the 110th Congress; it is unclear whether they will continue to be an issue in the 111th Congress.
The Congressional Budget Office (CBO) March 2008 projection of Medicare payments under Medicare Advantage is $112.8 billion in 2009 for coverage of 11.0 million enrollees, increasing to $221.2 billion in 2018 for 16.6 billion enrollees. This report is an overview of the Medicare Advantage program, and includes legislative history and analysis of recent trends. It will be updated to reflect significant changes to the program.