Medicare Advantage (Part C)
A private health insurance alternative to traditional Medicare that covers Parts A and B and usually Part D, enrolling over half of all Medicare beneficiaries as of 2024.
Medicare Advantage (Part C) is a term from U.S. hospital cost and quality reporting — the field that produces the CMS Hospital Compare program, the Medicare Inpatient Payment files, and the patient-facing tools built on top of them. The definition below covers what the term means in CMS files, what it does not mean, and how it interacts with the other measures CMS publishes. On the LakeQuality value rubric, Medicare Advantage (Part C) is one of the inputs (directly or indirectly) to the combined cost-and-quality grade. Understanding how the term is computed at CMS — what counts and what does not — is part of reading hospital pages defensibly.
Each hospital page on LakeQuality surfaces the specific Medicare Advantage (Part C) value for that facility (when CMS reports one), so the general definition here translates into a concrete data point on the per-hospital pages you actually use.
How It Works
Medicare Advantage (MA), also called Medicare Part C, enrolls private health plans to provide Medicare benefits to beneficiaries under contract with CMS. As of 2025, approximately 33 million beneficiaries (54% of all Medicare enrollees) are in MA plans, up from 25% in 2010, with growth driven by richer benefits (dental, vision, hearing, meals, transportation, OTC allowances), capped out-of-pocket spending (required, with a 2025 mandatory cap of $9,350 in-network), and heavy carrier marketing. The largest MA carriers are UnitedHealthcare (28% share, approximately 9.3 million members), Humana (18%), CVS/Aetna (12%), Elevance (Anthem, 7%), and Kaiser Permanente (6%). MA plans operate on capitation: CMS pays each plan a monthly per-member amount derived from county-level benchmarks, risk-adjusted for each member's expected health costs using Hierarchical Condition Categories (HCCs) scored from diagnosis codes. The average 2024 MA payment was about $13,500 per member per year, rising to $25,000+ for members with multiple chronic conditions. Hospitals typically receive Medicare Advantage payments at or near traditional Medicare FFS rates for in-network care, though some MA plans negotiate rates slightly below FFS and use more aggressive prior authorization, post-payment audits, and observation status designations. Hospital frustration with MA has grown sharply: documentation burden, slow claims turnaround, disputed downgrades from inpatient to observation, and denial rates 2-5x higher than traditional FFS have led some systems (Scripps, SSM, Memorial Hermann, UHS) to terminate contracts with specific MA plans in 2023-2025. The MedPAC March 2024 report estimated that MA costs Medicare 22% more per beneficiary than traditional FFS would cost for the same members, driven primarily by favorable risk coding and quality bonuses under the Star Ratings program.
Related Terms
- Medicare, Federal health insurance for Americans aged 65+ and certain younger people with disabilities, covering hospital stays (Part A), outpatient care (Part B), Medicare Advantage (Part C), and prescription drugs (Part D).
- Medicaid, A joint federal-state health insurance program for low-income individuals, paying hospitals less than Medicare and covering over 80 million Americans as of 2025.
- Centers for Medicare & Medicaid Services (CMS), The federal agency within the Department of Health and Human Services that administers Medicare, Medicaid, CHIP, and the ACA marketplace, setting hospital payment rates, quality standards, and the data that HospitalCostData uses.
- Diagnosis Related Group (DRG), A classification system that groups hospital inpatient stays into categories based on diagnosis, procedures, and patient complexity, used by Medicare to determine how much a hospital gets paid.
- Observation Status, A Medicare outpatient classification for short hospital stays where patients receive monitoring and treatment without being formally admitted as inpatients, billed under Medicare Part B rather than Part A.
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About This Definition
This definition is part of the HospitalCostData Hospital Pricing Glossary, 47 terms explaining hospital costs, quality ratings, and healthcare billing. Written for patients, journalists, researchers, and healthcare professionals.