A Medicare Advantage Plan collects a certain amount of money from Medicare and uses that money to pay for the care of its clients. That amount is based on the number of patient members they have recruited. The individual amount per patient varies from state to state and from region to region. For example the Medicare Advantage Plan may pay $280 per member per month in one state and $680 per member per month in another state. These numbers are based on previous national statistics and statistics for the Medicare population in that area.

There are many Medicare Advantage Plans available. Some are well known and others are small. Some of them operate only in certain parts of the country. All of these plans have to comply with all Medicare rules but they are otherwise free to distribute funds to physicians, administrators, and other providers as they choose.