Medicare Advantage Hospital Networks: How Much Do They Vary?

A growing share of Medicare beneficiaries receives their care through Medicare Advantage plans.  Under such arrangements, plans offer an integrated benefit package that: combines Medicare Parts A and B, and usually also Part D; typically reconfigures cost-sharing; and often includes benefits not included in traditional Medicare.  Medicare Advantage plans have proven increasingly popular with Medicare beneficiaries, partly because they offer “one stop shopping,” and their premiums are typically lower than the costs of stand-alone prescription drug plans combined with Medigap or other supplemental insurance.  The number of Medicare beneficiaries enrolled in Medicare Advantage plans has more than tripled over the past decade, from about 5.3 million in 2005 to 17.6 million in 2016, and is projected to continue growing over the next decade.¹

Despite the growth of the program, relatively little is known about size and scope of provider networks in Medicare Advantage plans.  While beneficiaries in traditional Medicare can seek care from any provider participating in Medicare (virtually all hospitals and physicians), Medicare Advantage plans generally restrict coverage (except in emergencies) to affiliated network providers.  Although practices vary, Health Maintenance Organizations (HMOs), the most common form of Medicare Advantage plan, generally require beneficiaries to receive care from a provider in the network in order to have the cost of the care covered.  Beneficiaries enrolled in Preferred Provider Organizations (PPOs) can receive care from providers outside of their plan’s network and have the plan cover the cost of the care, but the cost-sharing for care received outside the network is typically higher than what beneficiaries would pay if they received the care from an in-network provider.

Beneficiaries can choose a plan or switch between Medicare Advantage and traditional Medicare once a year, during the annual open enrollment period between October 7 and December 15, and the change is effective beginning the following January 1.  Medicare Advantage plans are allowed to change their networks at any time during the calendar year; beneficiaries are not allowed to change plans outside of the open enrollment period, unless they are granted an exception by the Centers for Medicare and Medicaid Services (CMS) if they had, for example, an ongoing existing relationship with a terminated provider.²

People on Medicare have said that when considering Medicare Advantage plans, access to certain hospitals and doctors is a top priority for them.³  Additionally, the structure of provider networks can influence the way in which beneficiaries access care, and network adequacy is one of the criteria used by CMS to evaluate plans before they are approved.  CMS requires plans to include a specified number of doctors, hospitals, and other providers within a particular driving time and distance,⁴ but it is unclear how well these requirements are enforced.  Further, according to CMS, Medicare Advantage plans have less prescriptive provider requirements than Qualified Health Plans (QHPs) or Medicaid Managed Care Organizations (MCOs), and are required to include fewer data elements in their provider directories.⁵

In a recent investigation, the Government Accountability Office (GAO) identified several serious deficiencies in CMS’s oversight and enforcement of network requirements for Medicare Advantage plans, and strongly recommended greater scrutiny of the plans’ networks.⁶ The GAO found that CMS reviews less than 1 percent of all networks and does little to assess the accuracy of the network data submitted by the plan.  The GAO report found that CMS relies primarily upon complaints from beneficiaries and their caregivers to identify any problems with networks and does not assess whether plans that are renewing their current contracts continue to meet the network requirements.

This report is the first broad-based study of how provider networks are structured in Medicare Advantage.  Although some historical work examined provider networks across different payers, these studies are old and relatively limited in the information they provide.⁷  More recent work has focused on health plans participating in exchanges under the Affordable Care Act (ACA), rather than Medicare Advantage.  These more recent studies found that the scope of networks varies across the country, that some plans in the exchanges have networks that are substantially narrower than plans in the commercial markets, that HMOs have narrower networks than PPOs, and that plans with narrower networks may have lower premiums than plans with broader networks.⁸  One study also found that narrow network plans are less likely than broader plans in the exchanges to include an Academic Medical Center in the network.⁹  Plans offered in ACA exchanges with narrower networks of hospitals have not been found to have lower measures of quality or accessibility than broader network plans,¹⁰ but one survey showed that consumers in exchange plans with narrow hospital networks are less satisfied with their plan than consumers in plans with broader networks.¹¹

Multiple studies also have documented problems with the accuracy, clarity, and ease of use of provider directories for both plans in the exchanges and Medicare Advantage plans, including one study that found that only about half of dermatologists listed in Medicare Advantage plans’ provider directories actually accepted the plan and could be contacted based on information provided in the directory.¹²  While this study did not set out to examine the accuracy of provider listings, we encountered a number of issues related to the accuracy and reliability of provider directories in the course of our research (see end of the Results section).

This report examines the size and composition of Medicare Advantage plans’ networks, focusing on hospitals.  It presents data based on 20 diverse counties that account for 14 percent of all Medicare Advantage enrollees.  The report addresses three key questions:

1. What share of Medicare Advantage plans have broad, medium, or narrow hospital networks, based on the share of hospitals and hospital beds included in the plan network, and to what extent does this vary across counties?
2. Do Medicare Advantage plans typically include Academic Medical Centers and NCI-Designated Cancer Centers when one is located in the county?
3. What is the relationship between network size and other plan features, including premiums, quality star ratings, per capita Medicare spending, parent organization, and plan tax status?