Medicare MCOs reduce premiums, increase benefits

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Sunday, February 29, 2004

March 1, 2004

WASHINGTON - About 3.7 million of 4.6 million enrollees in Medicare Advantage plans, formerly known as Medicare+Choice, will see decreased premiums and improved benefits offered by their health plan because of increases in federal payment rates, according to a review by CMS.

For example, a plan in New York lowered its monthly premium to $22 – down from $140. A plan in Arizona reduced its beneficiary co-payments for certain services, including primary care physician visits, which dropped to $5 from $15, CMS reported.

The average premium paid by enrollees across all plans will go down about $11 (from $42.40 to $31.44). Also, the amended proposals show that enrollees in many health plans will see an increase in drug coverage. The percentage of enrollees that now have any type of drug coverage is up from 78% to 80%.

The increased payments were included in the Medicare Prescription Drug, Improvement and Modernization Act (MMA).

The new benefits and premium reductions are included in the amended adjusted community rate proposals submitted by 146 Medicare Advantage plans for the 4.6 million beneficiaries that have chosen to enroll in those plans. Increased payments to Medicare Advantage, formerly known as Medicare+Choice, will take effect March 1.

According to the plans’ amended proposals,

- 95% of the increased federal payments are being used to help beneficiaries:

- 42% of the additional funds are being used to strengthen provider networks and ensuring that beneficiaries continue to have more choices of physicians, specialists and other health care providers;

- 31% is being used to reduce enrollee premiums;

- 17% is being used to enhance existing benefits, including additional support for the availability of the Medicare-endorsed prescription drug discount card; and

- 5% is being used to reduce the amount enrollees pay for cost sharing and co-payments.

The 5% of funds remaining are being used by health plans to support stabilization funds that have to be used by the end of 2005 to help beneficiaries.

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