Medicare Says Beneficiaries To See Bigger Savings
With Medicare Advantage Than Ever Before
Greatest health plan availability and highest monthly
savings in 2005, CMS also announces 2006 payment rates
April 5, 2005 - Over 90 percent of the 41 million
Medicare beneficiaries across America could have access to Medicare
coordinated care programs and other health plan options in 2005. Most
of these health plans offer benefit packages that are increasingly
generous: beneficiaries who must buy Medigap coverage on their own or
who cannot afford Medigap will save nearly $100 a month on average
compared to traditional Medicare with Medigap, says the Centers for
Medicare & Medicaid Services.
CMS estimates that if the bulk of the unprecedented
number of complete plan applications it has received are approved, as
expected, the availability of Medicare Advantage plans will easily
exceed the maximum previous availability of health plans. The average
savings for beneficiaries in Medicare Advantage plans also increased
significantly compared to previous years.
“This year we will have broader health plan
participation than ever before in Medicare’s history, and the savings
for our beneficiaries are greater as well,” said CMS Administrator Mark
B. McClellan, M.D., Ph.D. “We are bringing Medicare up-to-date with
better benefits and a new emphasis on preventing diseases and preventing
disease complications. Medicare Advantage plans help beneficiaries save
through a focus on coordinated care and prevention that helps them stay
healthy and keep their costs way down.”
The unprecedented availability, enhanced benefits,
and increased savings in Medicare Advantage are the result of the
Medicare Modernization Act of 2003, reports CMS.
Since the beginning of 2005, CMS has received over
130 new health plan organization applications to offer services in 2005,
including 50 organizations completely new to the Medicare program and
around 70 new local PPOs. Some 96 current providers plan to increase
their service areas this year. Once the approvals are made final,
Medicare Advantage plans are expected to be operating in 49 states
covering the vast majority of Medicare beneficiaries.
Many Medicare beneficiaries did not have access to
the potentially cost-saving health plans previously, in part because of
some difficulties in coordinating provider networks in rural areas. CMS
estimates that for 2005, three-quarters of all Medicare enrollees who
live in rural areas could have a Medicare Advantage plan near home,
including an unprecedented level of access to coordinated care plans,
including PPOs.
Prior to these expansions, there are 160
coordinated care plans, including 28 PPOs, and nine private
fee-for-service plans in Medicare, with more than five million
beneficiaries enrolled.
CMS is still reviewing the applications submitted
by Medicare Advantage organizations, including the new regional PPOs,
and by prescription drug plans that want to serve Medicare beneficiaries
in 2006. Plans had until February 15 to apply for participation in the
program for the current year.
“Medicare Advantage plans are able to provide more
benefits at lower costs by focusing on high quality, better-coordinated
care with up-to-date benefits and proven approaches to keep people
healthy,” Dr. McClellan said. “This is especially true for our
beneficiaries with chronic diseases.”
The MMA also established a new option for Medicare
Advantage plans to exclusively or disproportionately enroll
beneficiaries with special needs (known as “special needs plans or SNPs).
The law specifies them as beneficiaries who are dually eligible for
Medicare and Medicaid, living in institutions or have severe or chronic
or disabling conditions. These plans make it possible for health plans
to improve the quality and coordination of care that is given to these
beneficiaries. CMS has approved 48 SNPs, and is reviewing 18
applications for services to be offered in 2005. In addition, more than
100 SNP applications have been submitted to provide services in 2006.
On average, enrollees in Medicare Advantage plans
now save nearly $100 in out-of-pocket expenditures each month because
average cost sharing for Medicare-covered services is lower than in
original Medicare, and because the plans cover additional services that
most Medicare beneficiaries would otherwise have to pay for out of their
own pockets.
Plan enrollees may see savings from their Medicare
Advantage plans through:
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Lower co-payments and deductibles than are available in the traditional
Medicare plan for Medicare-covered services.
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Out-of-pocket limits on certain types of medical spending compared to
traditional Medicare.
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Prescription drug coverage, including more generous benefits being
offered by many plans in 2005.
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Coordination of care for chronic illnesses including heart disease,
diabetes, lung disease, and cancer.
>
Nutritional, wellness, and preventive benefits.
>
Dental and vision benefits.
Increases in access to health plans offering
expanded benefits and greater savings, and a particular focus on
preventing complications of chronic illnesses, comes after changes in
the MMA which provides greater and more predictable financial support
for Medicare Advantage plans.
“We are already seeing the payoff from reforming
the Medicare Advantage program to give seniors better, more reliable
choices,” Dr. McClellan said. “We are pleased to see so many plans
competing to serve our beneficiaries, particularly those who can benefit
from coordinated care and disease management services to prevent
complications.”
CMS today also announced the 2006 national per
capita Medicare Advantage growth rate of 4.8 percent. This information
is used to determine annual increases in Medicare Advantage Payment
Rates, and was released in the Announcement of Calendar Year 2006
Medicare Advantage Payment Rates, which includes the annual rates for
2006. The growth percentage, based on actuarial projections, is the
final estimate of growth in Medicare costs from 2005 to 2006 for all
Medicare beneficiaries. It is determined primarily by the increase in
costs for beneficiaries in the traditional Medicare program.
CMS also released the risk adjustment model for the
Medicare Part D benefit in 2006. Paying drug plans appropriately
according to the enrollee’s health status will ensure that sicker
patients are able to enroll in the plan of their choice. These “risk
adjusters” will account for differences in expected drug costs based on
patient demographics, chronic diseases, low-income status, and
institutional status.
“We’re implementing risk adjustment on 100 percent
of our payments to prescription drug plans, and we are moving rapidly
from 50 percent risk adjustment of payments to Medicare Advantage plans
to 75 percent in 2006 and 100 percent in 2007,” said Dr. McClellan. “We
are concentrating Medicare’s payments to reward plans that help
beneficiaries with complex medical problems prevent complications,
through greater access to prescription drugs and care coordination
services.”
The announcement also includes clarifications and
answers to questions on the new prescription drug benefit generated by
the earlier notice. Additional information will be included in other
guidance materials.
The announcement of the 2006 MA payment rates is
available at http://www.cms.hhs.gov/healthplans/rates/default.asp.
