Press Releases

MEDICARE BENEFICIARIES TO HAVE MORE HEALTH PLAN CHOICES AND GREATER SAVINGS WITH MEDICARE ADVANTAGE PLANS THAN EVER BEFORE

Nearly all Medicare beneficiaries across the U.S.  have access to Medicare coordinated care plans and other health plan options in 2005, and these plans are providing significant new out-of-pocket savings to Medicare beneficiaries, particularly those with chronic illnesses. 

The Centers for Medicare & Medicaid Services (CMS) today announced that it has approved 143 new Medicare Advantage plans to provide services in 2005, far exceeding the highest number of plans that had been previously available. The availability of these plans in 49 states, along with their enhanced benefits and increased savings, are the results of the Medicare Modernization Act of 2003.

“This is great news for seniors who are getting more choices and better benefits as the new Medicare law kicks in,” said HHS Secretary Mike Leavitt.   “We have created a market for plans to compete in providing the best deal for seniors.  Now it is our responsibility to make sure seniors get the information they need to take advantage of these plans.”        

“We are seeing broader health plan participation than ever before, with a greater potential for savings for people with Medicare,” said CMS Administrator Mark B. McClellan, M.D., Ph.D.  “Medicare Advantage plans help beneficiaries save by better coordinating their care and offering preventive benefits that help them stay healthy and keep their costs down, reflecting the steps we are taking to help make Medicare more up-to-date.”

These Medicare Advantage plans also offer more extensive benefits or lower cost-sharing compared to the original Medicare program, providing greater cost savings to people with Medicare in 2005 than in previous years.   Beneficiaries who buy Medigap coverage on their own or who cannot afford Medigap will save just over $100 a month, on average, based on plans approved in March, compared to traditional Medicare with Medigap.  Those average savings include $29 in extra benefits, $2 in Part B premium reduction, and $70 in reduced average out-of-pocket expenses for Medicare-covered services compared to the national actuarial value.  

With the addition of these new plans, Medicare beneficiaries in 49 states will have access to 428 health plans across the nation.   Those include 41 plans completely new to the Medicare program and 66 new local PPOs.  Some 90 current providers plan to increase their service areas this year.  Many of these plans have already begun offering services, 53 will begin to offer services on July 1, 25 will begin to offer services in August, with even more offerings planned for September. 

With these expansions, 73 percent of Medicare beneficiaries will have access to HMO plans, 52 percent will have access to PPO plans, and 80 percent will have access to private fee-for-service plans.   The vast majority of beneficiaries in rural areas will have access to private fee-for-service PFFS plans, and nearly 20 percent of beneficiaries in rural areas will have access to coordinated care plans (HMOs or PPOs), most for the first time.  Altogether, there are just over 5 million beneficiaries currently enrolled in Medicare Advantage health plans, with an average of 50,000 beneficiaries per month joining the plans since last year. 

“By modernizing Medicare and expanding the Medicare Advantage program, seniors have better and more predictable benefits available to them than ever before,” Dr. McClellan said.  “In addition, we are increasing the ‘risk adjustment’ of the Medicare Advantage plan payments, so that the new support for these Medicare health plans is being concentrated on those that attract and retain beneficiaries with chronic illnesses.  As a result, Medicare Advantage plans are providing better support for our beneficiaries with chronic illnesses than ever before.  This includes special plans that serve beneficiaries with very high health care needs, who have the most to gain from greater continuity of care and benefits that help prevent disease complications.”

For people with Medicare who have special needs, such as those who are dually eligible for Medicare and Medicaid, living in institutions or have severe or chronic or disabling conditions, the new Medicare law allows Medicare Advantage organizations to exclusively or disproportionately enroll them into Special Needs Plans (SNPs).  Health plans have an opportunity to improve the quality and coordination of care that is given to these beneficiaries through SNPs.  CMS has approved 48 SNPs to serve beneficiaries in 2005 and is reviewing more than 100 additional SNP applications that have been submitted to provide services in 2006.

For 2005, many Medicare Advantage plans are providing a variety benefits, including:

• Lower and more predictable co-payments and deductibles than available in the traditional Medicare plan for Medicare-covered services;

• Out-of-pocket limits on certain types of medical spending compared to traditional Medicare;
• Prescription drug coverage, including richer benefits being offered by many plans in 2005;
• Coordination of care for chronic illnesses including heart disease, diabetes, lung disease, and cancer;
• Nutritional, wellness, and preventive benefits; and
• Dental and vision benefits.

CMS is currently reviewing the applications, formularies and bids submitted by Medicare Advantage organizations, including the new regional PPOs, and by prescription drug plans that want to serve Medicare beneficiaries in 2006.  CMS expects to finalize contracts with those organizations later this year.

“The interest from health plans to provide even better coverage options in 2006 has been high, providing a range of health plan choices for next year that will include the same range of plans as are available to Federal employees around the country,” said Dr. McClellan.  “We are pleased to see so many plans competing to help our beneficiaries, particularly those who need help with continuity of care and other benefits that will prevent disease complications.”