Comparison of Consumer Protections in Three Health Insurance Markets: Medicare Advantage, Qualified Health Plans and Medicaid Managed Care Organizations

Delivering health insurance benefits through private plans, particularly capitated arrangements, can make costs more predictable for state and federal governments and increase care coordination for consumers. However, delivery of insurance benefits through private plans also can add complexity for consumers because each plan and market is unique, and can provide different benefits, require different cost-sharing for services, and often include and exclude different providers. Navigating health coverage delivered through private plans can be especially challenging for consumers with low incomes, low health literacy, cognitive impairments, expensive or chronic health conditions, and those who have a history of being uninsured. Building consumer protections into private health plans can help to ensure enrollees have access to coverage and the full scope of benefits to which they are entitled.

This issue brief examines the similarities and differences in consumer protections in three major sources of insurance coverage delivered through private plans: Medicare Advantage (MA), Qualified Health Plans (QHPs) offered through the Marketplaces, and Medicaid Managed Care Organizations (MCOs). These three insurance markets, to different extents, are overseen by the same agency within the federal government, the Centers for Medicare and Medicaid Services (CMS). Although there are similarities in the consumer protections provided by these various coverage schemes, there are also notable differences, and these differences may raise issues for consumers – particularly those who are enrolled in plans in two or more of the markets either consecutively or concurrently. For example, someone may be covered by a QHP offered through a Marketplace followed by a Medicare Advantage plan when they turn 65. It is likewise possible that individuals with low incomes may be in a QHP, Medicaid MCO, and Medicare Advantage plan within the span of several years due to age, fluctuations in income and/or disability status.

The three insurance markets on which this paper focuses were created for different purposes and for different populations, and their varied structures reflect this diversity. Medicare is a purely federal program, Medicaid is a joint federal/state program, and the Marketplaces are federal, state, or federal-state partnership. Medicare was designed to serve older adults and younger people with disabilities, without regard to income. The Marketplaces were created to provide insurance to people without access to other sources of coverage, and include premium tax credits and subsidies to make coverage more affordable for those with limited incomes. In contrast, Medicaid is a program for individuals with low-incomes and cost-sharing is correspondingly more restricted than in the other two programs. For purposes of this report, Medicaid is included when the comparison to the other two programs is relevant; in other words, when the difference is more than a reflection of the different program target populations or program design intent.

This paper reviews the federal rules that apply for Medicare Advantage plans, QHPs and Medicaid MCOs but assesses neither the degree to which these rules are enforced by state and federal governments, nor whether states apply more stringent requirements than the federal minimum standards for QHPs and Medicaid MCOs. It should be noted that some states have chosen to go above that federal minimum and have imposed additional requirements through their state-based Marketplaces as some states have similarly imposed additional requirements beyond the federal minimum for Medicaid MCOs. Further, a number of consumer protections for QHPs are currently either unimplemented or partially implemented.

Background on Medicare Advantage, Qualified Health Plans and Medicaid Managed Care Organizations

Medicare Advantage (MA) is built on the foundation of Medicare, a federal entitlement health coverage program with federal rules and oversight for people ages 65 and older and younger people with disabilities. The Medicare Advantage program, also known as Medicare Part C, is a voluntary coverage option available to Medicare beneficiaries as an alternative to the traditional fee-for-service Medicare program. Medicare Advantage plans must cover all services that are covered by Medicare Parts A and B, (and, if applicable, the Part D prescription drug benefit). Medicare Advantage plans can, and are often required to, provide benefits in addition to those covered by traditional Medicare.

The Affordable Care Act (ACA) expands access to individual health insurance coverage largely through private, non-employer based, individual health insurance offered through Marketplaces. Under the ACA all private insurance, including Qualified Health Plans (QHPs) offered through the Marketplaces, is subject to minimum federal standards, with flexibility reserved for states to apply stronger standards to plans they regulate. Income-based premium and cost-sharing subsidies are available through the Marketplaces to ensure coverage is affordable for those who have no other source of affordable coverage. Health insurance plans must be certified as QHPs by a Marketplace before they may be sold to consumers on that Marketplace. To be certified, QHPs must provide coverage for certain essential health benefits (EHB), follow established limits on cost-sharing (like deductibles, copayments, and out-of-pocket maximum amounts), and meet other requirements. QHPs are divided into four different categories based on the percentage of health costs a plan is expected to pay (actuarial value): Bronze, Silver, Gold, and Platinum, all of which must cover EHB.¹

Medicaid is a major source of coverage for people with low incomes and people with disabilities. Medicaid is jointly financed by the federal government and the states and administered by the states with federal oversight.   Federal law requires states participating in Medicaid to cover certain mandatory benefits, and states can choose to cover additional optional benefits. States can choose to provide Medicaid benefits through managed care delivery systems, including managed fee-for-service (FFS) models, such as primary care case management, and capitated models, such as managed care organizations (MCOs), private health plans that contract with the state on a risk basis to deliver Medicaid services.² An increasing number of Medicaid beneficiaries – now more than half – receive Medicaid coverage through managed care plans. (For more information about these three programs, see Appendix A.)