Medicare Advantage and Medicare Prescription Drug Plans in Rural Areas

Research center:
Lead researcher:
Project funded:
September 2009
Project completed:
August 2012
Enrollment in Medicare Advantage (MA) plans in rural areas grew 35% in the year ending in June 2008 and has more than quadrupled since the inception of the MA program at the beginning of 2006. Despite the addition of the regional PPO as a new option under MA, virtually all growth in MA plans in rural areas since 2005 has been in private fee-for-service (PFFS) plans. The rapid growth in MA plans, as well as evidence that MA plans are being paid significantly more than traditional fee-for-service Medicare, has created the impetus for reform of the MA program, especially reductions in payment to MA plans. If MA payment changes are passed, it will be imperative to track the impacts of changes in MA payment on enrollment in MA plans, and the array of benefits offered by MA plans.

This project will continue the RUPRI Center's work in tracking and analyzing the trends in MA plan enrollment in rural areas, including changes in types of plans. We will explore the factors accounting for variation in MA and PFFS enrollment growth across the United States, focusing on the role of payment rate variation and changes in those rates. We will be particularly interested in changes in the areas served by (measured by enrollment) PFFS plans as the plans prepare to meet the requirement from the Medicare Improvements for Patients and Providers Act of 2008 that they form provider networks by 2011 in any location with at least two local network plans being offered.

The analytical explanations of trends in MA enrollment will use models of the MA market drawn from the literature and estimated in 2009 to explain the presence of plans and enrollment in plans. In particular, the "reservation price" model provides a useful framework for this analysis. Products will include policy briefs, a policy paper, and a journal article.


  • Stand-Alone Prescription Drug Plans Dominated the Rural Market in 2011
    RUPRI Center for Rural Health Policy Analysis
    Date: 09/2012
    This report shows that as of May 2011, 59.1% of rural Medicare beneficiaries were enrolled in Medicare Part D through insurance plans that provide coverage for prescription medications. It also provides further detail, including urban and rural enrollment by type of plan and by state.