Which description best captures Medicare Advantage plans in terms of payment and network structure?

• A. Fee-for-service with no network.
• B. Salary-based payments to providers.
• C. Per diem payments with open access.
• D. Capitation payments and network-based care management.

Answer: (D)

Medicare Advantage plans operate on a capitated, network-based care model. The plan receives a fixed per-member-per-month payment from Medicare, typically adjusted for risk, and uses that money to cover a defined set of benefits. Providers are contracted within a network, and the plan coordinates care through disease and utilization management to control costs and improve outcomes. This capitated structure and emphasis on a networked delivery system are what distinguish Medicare Advantage from fee-for-service or salary- or per diem–based payment arrangements.