4 keys to scrutinizing Medicare Advantage cuts

Ominous warnings about Medicare Advantage plans have sounded for more than a year now.

Health insurers say federal funding cuts to these privately run versions of Medicare will force them to whack benefits, raise premiums, or leave some geographic markets entirely as they fight rising health care costs. The government is paring back the money it provides as part of its effort to fund the health care overhaul, which aims to cover millions of uninsured people.

Plan changes are starting to crystallize for Medicare Advantage customers, who are about a month into the annual open enrollment period during which they can search for new coverage. Benefits experts say patients are seeing fewer choices this year, and more are losing doctors from their insurance coverage networks. Open enrollment lasts until Dec. 7.

Here are some important points to consider if you’re still shopping:

Expect fewer plan choices

The number of Medicare Advantage plans offered next year will slip more than 5 percent to 2,522, according to the market analysis firm Avalere Health.

How much that matters will depend on where you live and the coverage you have. Avalere says that most counties will see some decrease in the number of plans, with those in the South and Midwest generally seeing more.

Some preferred provider organization plans, or PPOs, are more vulnerable to funding cuts because they feature large networks of doctors or care providers. That expense can squeeze profitability for insurers.

If your plan is among the ones being scrapped next year, you should have received a cancellation notice by Oct. 1.

Check on your doctor

The biggest provider of Medicare Advantage plans, UnitedHealth Group, expects to trim the number of doctors in its network nationally by 10 to 15 percent by the end of next year. The insurer declined to say how many doctors are in that network. It provides Medicare Advantage coverage for more than 2.9 million people

UnitedHealth has been restructuring its Medicare Advantage business since 2010 to absorb rate reductions, said Jack Larsen, CEO of its Medicare and retirement business. It has already worked on things like cost-cutting and fraud prevention.

‘‘This is one more step in what has been a number of steps to keep these plans affordable over a number of years,’’ he said, adding that the doctor cuts will focus mainly on specialists, not primary care.

Regardless of whether your insurer has announced physician cuts, it pays to double check that the doctors you see will still be in your plan’s network. The costs for care sought outside an insurer’s network can be much higher.

Scrutinize the details

Insurers are pushing to make the premiums they charge attractive even as they absorb funding cuts. That means they may skimp on some benefits or charge more for a hospital stay, so don’t swoon if you see a particularly low premium.

‘‘It’s more important this year than ever that people look below the surface,’’ said Ross Blair, a senior vice president at eHealthMedicare.com.

Plans usually cut benefits like dental or vision coverage first when they look to control costs, said Eric Maddux, director of Medicare services for eHealthMedicare. Then they may start increasing what the patient pays. A patient, for instance, may have to pay $300 per day for the first several days of a hospital stay instead of $250. It may mean bigger co-payments at the doctor’s office, a higher deductible, or a larger annual out-of-pocket maximum. Blair said the average cap on out-of-pocket expenses has risen to $4,800 this year, from $4,400.

Aside from the payment terms, look for the star rating the government attaches to a plan as a way to judge its quality. Plans are rated from poor to excellent on a one to five scale. Five-star plans have a gold star icon affixed to their name in the plan finder at www.medicare.gov.

What it all means

Medicare Advantage enrollment has continued to grow despite funding concerns. About 14.4 million people are enrolled in these plans this year, an increase of nearly 10 percent from 2012, according to the nonprofit Kaiser Family Foundation, which studies health care issues.

Enrollment in the plans has increased by 30 percent from 11.1 million customers since 2010, the year the president signed the national health care overhaul into law. Medicare Advantage plans now cover about 28 percent of the population enrolled in Medicare.

Kaiser also noted, however, that funding cuts to the plans have not been fully phased in, and bonus payments the government has doled out to insurers have partially offset the cuts that have been made.

So it remains to be seen whether the reductions will stunt growth.