Popularity of Medicare Advantage Plans fuels influx of new companies into the marketplace with anticipated enrollment of more than 22.6 million beneficiaries, or more than one-third of Medicare-eligible consumers

Continuing enrollment growth in Medicare Advantage plans is expected in 2019 and beyond. The projections are for double-digit percentage increases in Medicare Advantage enrollees. This is not auspicious for clinical laboratories and anatomic pathology groups because it means a shrinking proportion of Medicare beneficiaries remain in the Part B program.

Whereas any medical laboratory can provide services for any Medicare Part B beneficiary, that is not true for beneficiaries enrolled in Medicare Advantage plans. That’s because private health insurers operating Medicare Advantage plans typically contract with national lab companies while narrowing their lab networks, thereby limiting access to these patients by independent community laboratories, hospital lab outreach programs, and pathology groups.

Enrollment in Medicare Advantage is expected to reach record totals in 2019. More than 22.6 million new Medicare beneficiaries are anticipated, with 14 new private companies offering plans, Kaiser Health News (KHN) reports. As enrollment shifts from traditional Medicare to Medicare Advantage the health of regional clinical laboratories can suffer, as smaller labs lose access to beneficiaries.

Enrollment in Medicare Advantage Plans Increases, Despite Cut in Funding

Because Medicare Advantage penetration varies across counties and states, some local laboratories may experience less of an impact from the growing popularity of Medicare Advantage plans than others. According to the Kaiser Family Foundation (KFF), Medicare Advantage plans attract less than 11% of eligible beneficiaries in Arkansas, Vermont and Wyoming. However, more than 41% of Medicare participants in Florida, Hawaii, Minnesota, and Oregon choose Medicare private health plans over Medicare Part B.

Although the Patient Protection and Affordable Care Act (ACA) cut federal funding to Medicare Advantage plans, the 2010 law ultimately did not cause insurers to exit states or leave the business altogether, as was predicted. Instead, enrollment in Medicare Advantage doubled to more than 22.6 million enrollees, growing from a quarter of Medicare beneficiaries to more than a third, between 2010 and 2019, KHN reported.

Bonus payments from the federal government to Medicare Advantage plans that have quality ratings of four or more stars (on a one to five scale) helped fuel the growth. Plans without ratings also are eligible for bonus payments, which must be used to reduce cost-sharing or premiums or to provide extra benefits.


Since 2010, enrollment in Medicare Advantage has doubled to more than 22.6 million enrollees, growing from a quarter of Medicare enrollees to more than one-third. This trend is not favorable to many clinical laboratories, as the private health insurers who operate Medicare Advantage plans often contract with the billion-dollar lab companies and exclude regional and independent medical laboratories as network providers. (Photo copyright: Kaiser Family Foundation, Centers for Medicare and Medicaid Services.)

“The Affordable Care Act did not kill Medicare Advantage, and the program looks poised to continue to grow quite rapidly,” Bill Frack, Managing Director with healthcare advisor L.E.K. Consulting, told KHN.

In total, 2,734 Medicare Advantage plans will be available nationwide to consumers in 2019, an 18% increase from 2018 (417 more plans). That’s the largest number available since 2009, KFF announced late last year in a report on the program’s growth. These numbers exclude employer or union-sponsored group plans and Special Needs Plans, which are only available to select populations.

The average Medicare beneficiary has access to 24 Medicare Advantage plans in 2019, an increase from 21 last year and 19 from 2016-2017.

Profits Increase While Premiums Decline

Medicare Advantage plans are attractive to seniors because premiums, deductibles, and cost sharing typically are lower than government-run Medicare Part B and because many plans include additional benefits such as vision, dental, and prescription drug coverage and fitness programs.

In a press release, the Centers for Medicare and Medicaid Services (CMS) noted that the Medicare Advantage average monthly premium has continued to steadily decline, recording an estimated 6% drop in 2019 to $28, from an average of $29.81 in 2018. Nearly 83% of Medicare Advantage enrollees remaining in their current plan will have the same or lower premium in 2019. Approximately 46% of enrollees in their current plan will have a zero premium.


“The steps that the Trump Administration has taken to improve and drive competition in Medicare Advantage means more savings, more benefits and lower costs for seniors, CMS Administrator Seema Verma said in the press release. “[With the] popularity of programs, such as Medicare Advantage, and with the various new supplemental benefits and policy changes that have been adopted, we expect plan choices to be even more robust moving forward.” [Photo copyright: Centers for Medicare and Medicaid Services.)

Declining premiums, however, have not meant reduced profits for Medicare Advantage plan administrators. Healthcare Finance recently reported that UnitedHealth Group’s third-quarter earnings from operations grew $502 million, or 12.3%, year-over-year to $4.6 billion, with growth in the insurer’s Medicare Advantage business claiming most of the credit for the higher numbers.

UnitedHealthcare’s Medicare Advantage plans served 525,000 more consumers year-over-year, with the purchase of a physician-owned Medicare Advantage organization in Louisiana accounting for 65,000 of the total.

“These results reflect our businesses delivering increased value at an accelerating pace to society and the millions of people we serve—one person at a time,” David S. Wichmann, CEO of UnitedHealth Group, told Healthcare Finance.

While Medicare Advantage plan growth may be good news for insurers, the outlook for anatomic pathology groups and medical laboratories is less rosy. The proportion of Medicare beneficiaries enrolled in the Part B program shrinks steadily. Meanwhile, payers’ increased reliance on narrow networks as a way to rein in rising costs excludes many regional laboratories. Ultimately, these developments threaten many in the clinical laboratory industry, not just smaller laboratories, and underline the need for pathologists and clinical laboratory managers to add recognized value to the medical testing services they provide in their communities.

—Andrea Downing Peck

Related Information:

A Dozen Facts About Medicare Advantage

Medicare Advantage Riding High as New Insurers Flock to Sell to Seniors

Medicare Advantage Growth Drives United Health’s Strong Earnings

Medicare Advantage 2019: First LookMedicare Advantage Premiums Continue to Decline while Plan Choice and Benefits Increase in 2019