News Release
FOR IMMEDIATE RELEASE
Wednesday, Oct. 6, 2004 |
CMS Media Affairs
(202) 690-6145 |
Medicare Advantage Plans Expand Coverage to Seniors, Lower Costs for Enrollees
New Plans Entering Medicare Advantage Program,
Providing More Choices and Lower Costs for Beneficiaries
HHS Secretary Tommy G. Thompson announced today Medicare Advantage plans were seeking to expand coverage to 1.6 million additional seniors and persons with disabilities, while also lowering their premium and out of pocket covered services costs by an average of 10 percent and providing more benefits -- evidence that the new Medicare Modernization law is a successful investment in seniors and their access to better health care benefits.
Secretary Thompson said that 35 Medicare Advantage plans had made new applications to provide coverage and 22 had applied for expansion of service areas. If approved this translates into 1.6 million additional Medicare beneficiaries living in 93 counties and 11 states who will have access to Medicare Advantage plans. This expansion is on top of the nearly 5 million Medicare beneficiaries enrolled in Medicare Advantage plans who will continue to receive high quality care at affordable costs in 2005.
In addition to an overall expansion of coverage areas, initial analysis show that plan premiums and cost sharing for Medicare-covered services are declining on average by 10 percent, while plans continue to provide more benefits not covered by fee-for-service Medicare, including drugs, dental, vision and preventive and wellness services, providing average savings of about $23 per month.
"The new Medicare Modernization law is expanding access to health care for seniors and lowering their costs," Secretary Thompson said. "We made an investment in seniors and it is paying off with greater access to health care at more affordable costs. Under President Bush's leadership, we are reversing a trend of seniors losing access to Medicare Advantage plans each year to an environment where plans are expanding coverage and lowering costs."
The expansion of Medicare Advantage plans to provide more health care access to seniors represents a significant shift from years of plans dropping out of the Medicare Advantage program and reducing seniors' access to coverage.
"The steps Congress and the Administration have taken to stabilize the Medicare Advantage program are keeping costs down for Medicare beneficiaries," said Centers for Medicare & Medicaid Services Administrator (CMS) Mark B. McClellan, M.D., Ph.D. "With a turnaround in the availability of health plans that provide coordinated care in Medicare, we expect that many more Medicare beneficiaries will have access to the savings in Medicare Advantage plans in 2005, on our way to even broader availability of less costly, comprehensive coverage in 2006."
Based on analysis of information filed in mid-September by Medicare health plans in all states except Florida -- those applications were delayed until October 4 because of hurricane activity in that state -- Medicare beneficiaries will generally see cost reductions and improvements in their health plan benefit packages. A preliminary analysis by CMS indicates that, on average, health plan enrollees in coordinated care plans offered to individual (non-group) Medicare Advantage enrollees will see:
- Declines in premiums of about 10 percent, to $30 from $33;
- Declines in cost sharing for Medicare-covered services to about $51 a month, compared to beneficiaries in fee-for-service Medicare without supplemental coverage, who will pay about $119 a month, a savings of $68 or 57 percent; and a 10 percent decline in out-of-pocket payments compared to 2004.
- Coverage of benefits that Medicare does not cover at all, such as drugs, dental, vision, and preventive and wellness services providing savings of about $23 a month on average.
Altogether, if all expansion and new applications are approved, about 66 percent of Medicare beneficiaries will have access to at least one coordinated care plan, compared to the current 62 percent and up from just 59 percent who had access to at least one plan in 2003. Access will also improve in rural areas, where about 20 percent of all Medicare beneficiaries will have access to at least one coordinated care plan, compared to the current level of 16 percent.
This is a reversal in the trends in Medicare in the last few years: going into 2001, 327,000 beneficiaries were affected by health plan non-renewals, down to approximately 41,000 beneficiaries last year. This year, only five health plans nationwide have reported they will either withdraw from Medicare Advantage or reduce their service area in 2005. These actions affect fewer than 6,200 plan enrollees who all have other health plan options in their communities.
Medicare Advantage plans are able to provide lower costs and more benefits through better-coordinated care and steps to encourage higher-quality care. This includes:
- Providing up-to-date benefits that use proven approaches to keep beneficiaries healthy and manage their chronic diseases. Under the new Medicare law, better preventive benefits and disease management services are coming in fee-for-service Medicare as well, but these approaches are already fully integrated in Medicare Advantage coordinated care plans.
- Supporting and rewarding health care providers when they take steps to keep total costs down while keeping patients healthy, for example through the use of telemedicine to avoid costly office visits and hospitalizations and through the use of electronic health records to improve efficiency. In contrast, Medicare's fee-for-service payment system pays providers more when patients have more avoidable complications.
- Providing information on the quality and results of care, in the health plans themselves and for many of their participating providers, so beneficiaries are better able to find the best care for their needs and providers are encouraged to improve quality.
As a result of these efficiencies, Medicare Advantage plans can provide lower deductibles and co-payments for Medicare-covered services, limits on total out-of-pocket costs for Medicare-covered services, and additional benefits that Medicare does not cover. Overall, beneficiaries in Medicare Advantage plans are expected to save more than $90 a month in savings compared to the costs of fee-for-service Medicare.
Beneficiaries with "special needs" who are chronically ill or dually eligible for Medicare and Medicaid are also beginning to see more affordable, coordinated care as a result of the new Medicare law. Using the law's new authority allowing Medicare to provide special, customized health plans for these beneficiaries, CMS has recently approved requests for the first two special-needs plans -- one by PacifiCare in Arizona, Texas and California and one by AmeriHealth HMO Inc. in southern Pennsylvania -- that will serve dually eligible beneficiaries. These beneficiaries are able to get particularly large savings: according to a recent analysis, beneficiaries in fair or poor health can save almost $2,000 per year through Medicare Advantage plans.
In 2005, 50 percent of payments to Medicare Advantage plans will be risk adjusted, meaning that the payments will be based on the health status of each enrollee. Medicare is increasing its use of risk adjustment, so that additional payments are targeted to beneficiaries with chronic illnesses.
CMS will post the plan benefits and premiums on www.medicare.gov on Oct. 19. The same information will be available by calling 1-800-MEDICARE and is currently being mailed as part of the Medicare & You 2005 handbook that should be arriving in beneficiaries' homes within the next couple of weeks.
Because of hurricane activity, beneficiaries in Florida will begin to receive their Medicare & You 2005 handbooks the first week of November and be able to see updated information on www.medicare.gov at that time as well. Beneficiaries in Florida also have an extended open enrollment period that ends Jan. 31, 2005.
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Note: All HHS press releases, fact sheets and other press materials are available at http://www.hhs.gov/news.
Last Revised: October 6, 2004
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