Some Important Considerations When Choosing a Medicare Plan

Do Medicare Advantage Plans Pay Providers the Same as Traditional Medicare?
Unfortunately not.

Medicare Advantage (MA) plans—often marketed as “Medicare Replacement Plans” and administered by private insurers like Aetna, Cigna, UnitedHealthcare, and Blue Cross Blue Shield—are not required to follow Medicare’s fee schedule or reimbursement rules. Unlike Original Medicare, which uses standardized rates set by the federal government, MA plans negotiate their own payment structures. Studies show that Medicare Advantage plans typically pay providers 10–15% less than Original Medicare for the same services, and reimbursement often takes longer—sometimes twice as long—due to added administrative hurdles.

You Might Ask….Why Do Providers Accept These Rates?
Good question! The simple answer is leverage. Large health systems can negotiate better contracts, but smaller practices often cannot. If an insurer refuses to negotiate, the only alternative is to drop the plan—something many providers are now doing. In fact, over 40 health systems across 25 states have terminated MA contracts in the past 18 months due to financial and administrative strain.

Why This Matters 

Lower Reimbursement Rates: Many MA plans offer capped rates that can fall well below operating costs—sometimes less than what you’d pay for a massage or a haircut. This is especially harmful for smaller practices that lack negotiating leverage. This type of behavior should not be supported.

Administrative Burden: MA plans frequently require prior authorizations, extensive documentation, and strict compliance with plan-specific rules before approving payment. These steps delay care and increase overhead for providers.

High Denial Rates: Prior authorization denials are rising, with some insurers rejecting or partially denying up to 7.4% of requests. While most denials are overturned on appeal (83%), the process consumes time and resources, creating cash flow challenges for practices.

Network Restrictions: Providers must join MA networks to serve patients, and leaving a network often means losing access to those patients. Smaller practices may have no choice but to accept unfavorable terms or go out-of-network entirely.
The Hidden Costs for Patients

While MA plans advertise low premiums and extra benefits (dental, vision, fitness), these perks come with trade-offs:

Restricted Provider Networks: Unlike Original Medicare, which offers nationwide access to any provider who accepts Medicare, MA plans limit you to their network. Out-of-network care is often expensive or not covered at all.

Prior Authorization Delays: Many services—imaging, surgeries, specialty care like physical therapy—require prior approval. These delays can disrupt treatment and harm outcomes.

High Out-of-Pocket Costs: Despite low premiums, many MA plans charge a high copay for each visit…sometimes even higher than the 20% co-insurance charged with traditional Medicare.  In addition, MA plans have maximum out-of-pocket limits up to $8,550 for in-network care (2025), and even higher for out-of-network services. Copays for hospital stays, specialists (PT is includes here), and tests can add up quickly.

Annual Plan Changes: Networks, benefits, and costs can change every year, creating uncertainty for patients.

Limited Coverage for Travelers: MA plans generally do not offer nationwide coverage except for emergencies, unlike Original Medicare.

Key Differences

Original Medicare

• Administered by: Federal government
• Provider Access: Any doctor or hospital that accepts Medicare nationwide
• Costs: Part B premium (~$185/month in 2025), deductibles, 20% coinsurance
• Flexibility: No network restrictions; can add Medigap for extra coverage

Medicare Advantage

• Administered by: Private insurers
• Provider Access: Limited to plan networks (HMO/PPO)
• Costs: Part B premium + possible plan premium; copays vary
• Restrictions: Prior authorizations, referrals, and network limitations
• Extras: May include dental, vision, hearing, and drug coverage—but at the cost of flexibility and predictability

Bottom Line

Medicare Advantage plans can look attractive on paper, but lower provider payments, administrative complexity, and restricted access often outweigh the perks—especially for patients with chronic conditions or those who travel frequently. Providers face shrinking margins and growing paperwork, while patients risk delays, denials, and surprise costs.

We encourage you to speak with your trusted care providers and an independent Medicare advisor to fully understand your options. Be cautious of Medicare Advantage (Replacement) sales representatives who earn commissions for selling specific plans—those recommendations may not always align with your best interests. Most importantly, take your time, compare plans carefully, and do your research before enrolling. Your choice will impact both your access to care and your out-of-pocket costs, so make sure it’s an informed one.