The Commonwealth Fund is a private foundation supporting independent research on health and socia... more The Commonwealth Fund is a private foundation supporting independent research on health and social issues. The views presented here are those of the authors and should not be attributed to The Commonwealth Fund or its directors, officers, or staff.
The MedicareChoice program was created to expand choice and encourage beneficiaries to more activ... more The MedicareChoice program was created to expand choice and encourage beneficiaries to more actively consider the choices they have. This article assesses how "salient" choice is to Medicare beneficiaries. More than half of all Medicare beneficiaries in 2000 reported that they either have never considered their options to join a Medicare HMO or get supplemental coverage (44 percent) or did so last when they first became Medicare eligible (14 percent). Overall, 14 percent of Medicare beneficiaries found choice salient in 2000. Those new to Medicare or forced to switch because their plan left the program were more likely to consider choice, as expected. The multi-variate analysis shows that existing HMO enrollment is most strongly associated with salience of choice and also that this effect operates especially in the individual market. The findings of this research are consistent with the literature in highlighting the limited salience of choice to Medicare beneficiaries and the even more limited extent of actual switching that occurs in that market. There is little reason to believe that choice is more salient now than when the study was done. Policymakers who seek to encourage market-based solutions confront a dilemma: How to create incentives for a choice that most beneficiaries do not find particularly salient.
Medicare Advantage (MA), a voluntary program that provides beneficiaries with an alternative way ... more Medicare Advantage (MA), a voluntary program that provides beneficiaries with an alternative way to access traditional Medicare benefits, replaced the Medicare+Choice program in 2004 and became fully operational in 2006. This issue brief reviews recent trends in the program and includes information trends in firm participation and market share, changes in beneficiary choice, and growth in MA plans available to employer groups. The brief notes that the number of Medicare beneficiaries in MA plans continues to grow, to 8.2 million at the end of 2007, up from 5.4 million in March 2005. In the first four months of 2008, enrollment increased by more than 800,000. Private fee-for-service plans account for more than half of this new growth. About one in five Medicare beneficiaries (19 percent) is enrolled in an MA plan. In addition, four main players—UnitedHealthcare, Humana, Kaiser, and Blue Cross Blue Shield—accounted for more than half of enrollment at the end of 2007.
The Center for Medicare and Medicaid Innovation (Innovation Center) was created by the Affordable... more The Center for Medicare and Medicaid Innovation (Innovation Center) was created by the Affordable Care Act to identify, develop, assess, support, and spread new approaches to health care financing and delivery that can help improve quality and lower costs. Although the Innovation Center has been given unprecedented authority to take action, it is being asked to produce definitive results in an extremely short time frame. One particularly difficult task is developing methodological approaches that adhere to a condensed time frame, while maintaining the rigor required to support the extensive policy changes needed. The involvement and collaboration of the health services research community will be a key element in this endeavor. This issue brief reviews the mission of the Innovation Center and provides perspectives from the research community on critical issues and challenges.
Based on interviews with senior executives at 14 large firms, this issue brief finds that insurer... more Based on interviews with senior executives at 14 large firms, this issue brief finds that insurers anticipate continuing to offer Medicare Advantage plans in 2012, in part because of a Medicare demonstration project that awards bonus payments to plans based on their quality standards.
... in Medicare+Choice Health Plans, 19992001 Marsha Gold and Lori Achman Mathematica Policy Res... more ... in Medicare+Choice Health Plans, 19992001 Marsha Gold and Lori Achman Mathematica Policy Research, Inc. ... limits on benefits can result in substantial out-of-pocket costs to Medicare beneficiaries enrolled in Medicare+Choice (Kasten, Moon, and Segal 2000). ...
As the role of private plans in the future of Medicare becomes a focal point of change, policymak... more As the role of private plans in the future of Medicare becomes a focal point of change, policymakers need a better understanding of current trends in private plan choice. This publication profiles the trends in Medicare choices and private plan enrollment since 1999, showing declining enrollment despite growing diversity in choice. Current trends in coordinated care plans show (1) reduced choice, as well as declining benefits and higher premiums for enrollment accounting for declining enrollments; (2) enrollment in private plans remains concentrated in coordinated care plans, particularly HMOs, despite authority for other kinds of options and a targeted PPO demonstration; (3) plans are largely based in urban areas, but choice is eroding even in these areas; and (4) penetration of plans remains uneven across the country.
This spotlight examines enrollment trends in Medicare Advantage plans, including health maintenan... more This spotlight examines enrollment trends in Medicare Advantage plans, including health maintenance organizations (HMOs), preferred provider organizations (PPOs), and private fee-for-service (PFFS) plans. Despite the availability of many private Medicare Advantage plans, enrollment is highly concentrated among a small number of firms.
The Medicare Prescription Drug Improvement and Modernization Act (MMA) of 2003 created a temporar... more The Medicare Prescription Drug Improvement and Modernization Act (MMA) of 2003 created a temporary prescription drug discount card for most Medicare beneficiaries and a transitional assistance subsidy program to aid low-income beneficiaries in paying for pharmaceuticals until 2006, when the voluntary Medicare Part D prescription drug benefit goes into effect. While attention has been focused mostly on cards for Medicare beneficiaries in the traditional Medicare program who have no other source of coverage for pharmaceuticals, the program also authorizes exclusive cards that are offered by Medicare Advantage (MA) plans. These cards integrate with broader MA benefits, typically supplementing an existing prescription drug benefit. Enrollment in exclusive MA cards accounts for over half of those enrolled in the discount card program. This issue brief profiles the arrangements under which these exclusive cards are offered, the firms that offer them, areas in which they are offered, the way in which discount cards integrate with the existing drug benefit offered by many of the MA plans, and the potential lessons from this experience for the Part D benefit. ACKNOWLEDGMENTS Barbara Cooper of the Commonwealth Fund oversaw our work on this project and provided valuable feedback and comments on earlier drafts.
This new data spotlight reviews changes to Medicare Advantage plans and examines trends in plan p... more This new data spotlight reviews changes to Medicare Advantage plans and examines trends in plan participation, premiums, and certain benefits. Overall, enrollees can expect modest changes in 2011. On average, beneficiaries will be able to choose from among 24 plans.
This Data Spotlight provides an overview of Medicare Advantage enrollment patterns in March 2012,... more This Data Spotlight provides an overview of Medicare Advantage enrollment patterns in March 2012, including variations by plan type, state, and firm. It also analyzes trends in premiums paid by beneficiaries enrolled in Medicare Advantage plans including variations by plan type, and describes out-of-pocket limits and prescription drug coverage in the Part D "doughnut hole" provided by the plans selected
In 2015, more than 17 million Medicare beneficiaries (31%) are enrolled in Medicare Advantage pla... more In 2015, more than 17 million Medicare beneficiaries (31%) are enrolled in Medicare Advantage plans, 1 such as health maintenance organizations (HMOs) or preferred provider organization (PPOs). Medicare Advantage plans are offered as an alternative to the traditional Medicare program. Medicare beneficiaries can enroll in a Medicare Advantage plan, change Medicare Advantage plans, or switch from Medicare Advantage to traditional Medicare during the annual open enrollment period. Changes in the Medicare Advantage marketplace have always been closely watched, and since 2010 when the Affordable Care Act (ACA) was enacted, many have been interested in the effects of the ACA phasing down federal payments to Medicare Advantage plans. More recently, proposed mergers between health insurance firms with large footprints in Medicare Advantage have raised questions about how the mergers could affect beneficiaries. This spotlight analyzes publicly available data to review the Medicare Advantage plans offered in 2016. It provides updated information describing how Medicare Advantage plan choices are changing in 2016, includes new information on premiums, out-of-pocket limits and other plan features, and examines the role of large firms offering plans in the marketplace. Findings include: The average Medicare beneficiary will be able to choose from 19 plans in 2016, a number which has been relatively stable since 2012. Relatively few plans are entering or exiting the Medicare Advantage market, and for the most part, the same plans that were available in 2015 will be available in 2016. While the average Medicare beneficiary can choose from many plans, these plans will be offered by a handful of firms. The average beneficiary will be able to choose from plans offered by six firms; one-quarter of beneficiaries nationwide will have a choice of plans offered by three or fewer firms in 2016. If enrollees in Medicare Advantage plans with prescription drug coverage (MA-PDs) stay in the same plan between 2015 and 2016, their premiums will increase by 8 percent, on average. Similar to past years, about four-fifths of beneficiaries (81%) will have access to an MA-PD with no premium in 2016. Plans' limits on out-of-pocket costs for Part A and B benefits will rise in 2016, as they have in prior years. Almost two-fifths (39%) of plans will have limits equal to the maximum allowed ($6,700 per year) in 2016, up from 17 percent in 2013. Nearly half (45%) of MA-PDs will impose a deductible for Part D prescription drugs in 2016, an increase from 2015, and the average Part D drug deductible will be higher in 2016 than 2015. The average quality star rating for plans will be higher in 2016, with substantial growth in the number of contracts with 4 and 4.5 stars.
This data spotlight examines availability and enrollment trends for Medicare Advantage Special Ne... more This data spotlight examines availability and enrollment trends for Medicare Advantage Special Needs Plans, which provide a managed care option for beneficiaries with significant or relatively specialized care needs. These plans account for a small share of Medicare enrollment today, but are viewed by some as a way to address coordination of care and costs issues for dual eligible beneficiaries enrolled in both Medicare and Medicaid.
This data spotlight examines trends in benefits and cost-sharing for Medicare Advantage plans in ... more This data spotlight examines trends in benefits and cost-sharing for Medicare Advantage plans in 2010, including the wide variations found across plans and the rapid increase in cost sharing requirements for some benefits, including stays in skilled nursing facilities. It also examines the annual limits on out-of-pocket spending set by most Medicare Advantage plans and the availability of coverage for drugs in the Medicare drug benefit’s coverage gap, or “doughnut hole.â€
An Accountable Care Organization (ACO) is a provider-run organization in which the participating ... more An Accountable Care Organization (ACO) is a provider-run organization in which the participating providers are collectively responsible for the care of an enrolled population, and also may share in any savings associated with improvements in the quality and efficiency of the care they provide. Although the concept of ACOs originated in the Medicare and commercial sectors, several states are actively developing ACO initiatives in an effort to improve the care provided to people through the Medicaid program. Our review of a number of state initiatives indicates that most Medicaid ACOs are currently at an early stage of development, as states engage in relatively lengthy planning and implementation processes, both to accommodate diverse stakeholder concerns and to address state and federal legislative and regulatory requirements. The structure of Medicaid ACO initiatives is influenced by individual states' history and experience with managed care, other existing care delivery arrangements within Medicaid, and the challenges inherent in serving low-income and chronically ill populations. While Medicaid ACOs are a strategy to more directly engage providers and provider communities in improving care, cost-containment is also a significant motivating factor for many states. It remains to be seen how states will balance short-term cost-containment pressures against the investments in partnerships and delivery system redesign necessary for the success of Medicaid ACOs over the longer term. Recently, a number of states have begun to explore the possibility of implementing Accountable Care Organizations (ACOs) in Medicaid. The ACO concept, which originated in the context of the Medicare
As part of the Medicare Modernization Act (MMA), Medicare Advantage (formerly Medicare+Choice, or... more As part of the Medicare Modernization Act (MMA), Medicare Advantage (formerly Medicare+Choice, or "M+C") health plans will receive payments over and above what they were slated to receive in 2004. The original rate increase, announced by CMS in May 2003, will remain in effect for January-February 2004. The higher payments are intended to help stabilize Medicare Advantage, in which recent drops in enrollment have been prompted largely by two factors: the withdrawal of health plans from the program and higher monthly premiums and cost sharing in plans that have stayed. Payments will continue to be set at the county level. More specifically, the bill requires plans to use the additional payments to (1) reduce enrollee premiums or cost sharing, (2) enhance benefits, (3) stabilize provider networks and/or (4) put the dollars in a stabilization fund for use later in order to offset potential future premium increases or benefit cuts. And although information on how plans are actually using the funds is not yet available, many plans have indicated that they plan to reduce monthly premiums or cost sharing. Since plans must use stabilization funds by the end of 2005, they may be reluctant to use that option. The analysis presented here examines the distributional effects of the MMA-mandated increases across Medicare beneficiaries, private plan enrollees, and U.S. counties. How the MMA Changed 2004 Payment Rates The MMA changed the methodology used to calculate county payment rates in 2004 and 2005 as a prelude to full implementation of the bill in 2006. Before the bill was passed, plans received the greatest of three county payment rate increases:
To expand the role of private managed care plans in Medicare, the Medicare Prescription Drug, Imp... more To expand the role of private managed care plans in Medicare, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) provided Medicare Advantage plans with significant increases in monthly payment rates, beginning March 2004. About one-half of the payment increases were used by plans to reduce enrollee premiums and cost-sharing and enhance benefits; providers received most of the rest. Premiums had already begun to decrease in the Medicare Advantage program in early 2004 for the first time in several years, but the payment increases led to further declines-average monthly premiums dropped from $34 to $25 after the increases. The payment rate increases also slowed the trend toward genericonly drug coverage. Overall, average out-of-pocket costs declined to 2003 levels, although managed care enrollees in good health experienced a higher percentage reduction in out-ofpocket spending than those in poor health.
The Commonwealth Fund is a private foundation supporting independent research on health and socia... more The Commonwealth Fund is a private foundation supporting independent research on health and social issues. The views presented here are those of the authors and should not be attributed to The Commonwealth Fund or its directors, officers, or staff.
The MedicareChoice program was created to expand choice and encourage beneficiaries to more activ... more The MedicareChoice program was created to expand choice and encourage beneficiaries to more actively consider the choices they have. This article assesses how "salient" choice is to Medicare beneficiaries. More than half of all Medicare beneficiaries in 2000 reported that they either have never considered their options to join a Medicare HMO or get supplemental coverage (44 percent) or did so last when they first became Medicare eligible (14 percent). Overall, 14 percent of Medicare beneficiaries found choice salient in 2000. Those new to Medicare or forced to switch because their plan left the program were more likely to consider choice, as expected. The multi-variate analysis shows that existing HMO enrollment is most strongly associated with salience of choice and also that this effect operates especially in the individual market. The findings of this research are consistent with the literature in highlighting the limited salience of choice to Medicare beneficiaries and the even more limited extent of actual switching that occurs in that market. There is little reason to believe that choice is more salient now than when the study was done. Policymakers who seek to encourage market-based solutions confront a dilemma: How to create incentives for a choice that most beneficiaries do not find particularly salient.
Medicare Advantage (MA), a voluntary program that provides beneficiaries with an alternative way ... more Medicare Advantage (MA), a voluntary program that provides beneficiaries with an alternative way to access traditional Medicare benefits, replaced the Medicare+Choice program in 2004 and became fully operational in 2006. This issue brief reviews recent trends in the program and includes information trends in firm participation and market share, changes in beneficiary choice, and growth in MA plans available to employer groups. The brief notes that the number of Medicare beneficiaries in MA plans continues to grow, to 8.2 million at the end of 2007, up from 5.4 million in March 2005. In the first four months of 2008, enrollment increased by more than 800,000. Private fee-for-service plans account for more than half of this new growth. About one in five Medicare beneficiaries (19 percent) is enrolled in an MA plan. In addition, four main players—UnitedHealthcare, Humana, Kaiser, and Blue Cross Blue Shield—accounted for more than half of enrollment at the end of 2007.
The Center for Medicare and Medicaid Innovation (Innovation Center) was created by the Affordable... more The Center for Medicare and Medicaid Innovation (Innovation Center) was created by the Affordable Care Act to identify, develop, assess, support, and spread new approaches to health care financing and delivery that can help improve quality and lower costs. Although the Innovation Center has been given unprecedented authority to take action, it is being asked to produce definitive results in an extremely short time frame. One particularly difficult task is developing methodological approaches that adhere to a condensed time frame, while maintaining the rigor required to support the extensive policy changes needed. The involvement and collaboration of the health services research community will be a key element in this endeavor. This issue brief reviews the mission of the Innovation Center and provides perspectives from the research community on critical issues and challenges.
Based on interviews with senior executives at 14 large firms, this issue brief finds that insurer... more Based on interviews with senior executives at 14 large firms, this issue brief finds that insurers anticipate continuing to offer Medicare Advantage plans in 2012, in part because of a Medicare demonstration project that awards bonus payments to plans based on their quality standards.
... in Medicare+Choice Health Plans, 19992001 Marsha Gold and Lori Achman Mathematica Policy Res... more ... in Medicare+Choice Health Plans, 19992001 Marsha Gold and Lori Achman Mathematica Policy Research, Inc. ... limits on benefits can result in substantial out-of-pocket costs to Medicare beneficiaries enrolled in Medicare+Choice (Kasten, Moon, and Segal 2000). ...
As the role of private plans in the future of Medicare becomes a focal point of change, policymak... more As the role of private plans in the future of Medicare becomes a focal point of change, policymakers need a better understanding of current trends in private plan choice. This publication profiles the trends in Medicare choices and private plan enrollment since 1999, showing declining enrollment despite growing diversity in choice. Current trends in coordinated care plans show (1) reduced choice, as well as declining benefits and higher premiums for enrollment accounting for declining enrollments; (2) enrollment in private plans remains concentrated in coordinated care plans, particularly HMOs, despite authority for other kinds of options and a targeted PPO demonstration; (3) plans are largely based in urban areas, but choice is eroding even in these areas; and (4) penetration of plans remains uneven across the country.
This spotlight examines enrollment trends in Medicare Advantage plans, including health maintenan... more This spotlight examines enrollment trends in Medicare Advantage plans, including health maintenance organizations (HMOs), preferred provider organizations (PPOs), and private fee-for-service (PFFS) plans. Despite the availability of many private Medicare Advantage plans, enrollment is highly concentrated among a small number of firms.
The Medicare Prescription Drug Improvement and Modernization Act (MMA) of 2003 created a temporar... more The Medicare Prescription Drug Improvement and Modernization Act (MMA) of 2003 created a temporary prescription drug discount card for most Medicare beneficiaries and a transitional assistance subsidy program to aid low-income beneficiaries in paying for pharmaceuticals until 2006, when the voluntary Medicare Part D prescription drug benefit goes into effect. While attention has been focused mostly on cards for Medicare beneficiaries in the traditional Medicare program who have no other source of coverage for pharmaceuticals, the program also authorizes exclusive cards that are offered by Medicare Advantage (MA) plans. These cards integrate with broader MA benefits, typically supplementing an existing prescription drug benefit. Enrollment in exclusive MA cards accounts for over half of those enrolled in the discount card program. This issue brief profiles the arrangements under which these exclusive cards are offered, the firms that offer them, areas in which they are offered, the way in which discount cards integrate with the existing drug benefit offered by many of the MA plans, and the potential lessons from this experience for the Part D benefit. ACKNOWLEDGMENTS Barbara Cooper of the Commonwealth Fund oversaw our work on this project and provided valuable feedback and comments on earlier drafts.
This new data spotlight reviews changes to Medicare Advantage plans and examines trends in plan p... more This new data spotlight reviews changes to Medicare Advantage plans and examines trends in plan participation, premiums, and certain benefits. Overall, enrollees can expect modest changes in 2011. On average, beneficiaries will be able to choose from among 24 plans.
This Data Spotlight provides an overview of Medicare Advantage enrollment patterns in March 2012,... more This Data Spotlight provides an overview of Medicare Advantage enrollment patterns in March 2012, including variations by plan type, state, and firm. It also analyzes trends in premiums paid by beneficiaries enrolled in Medicare Advantage plans including variations by plan type, and describes out-of-pocket limits and prescription drug coverage in the Part D "doughnut hole" provided by the plans selected
In 2015, more than 17 million Medicare beneficiaries (31%) are enrolled in Medicare Advantage pla... more In 2015, more than 17 million Medicare beneficiaries (31%) are enrolled in Medicare Advantage plans, 1 such as health maintenance organizations (HMOs) or preferred provider organization (PPOs). Medicare Advantage plans are offered as an alternative to the traditional Medicare program. Medicare beneficiaries can enroll in a Medicare Advantage plan, change Medicare Advantage plans, or switch from Medicare Advantage to traditional Medicare during the annual open enrollment period. Changes in the Medicare Advantage marketplace have always been closely watched, and since 2010 when the Affordable Care Act (ACA) was enacted, many have been interested in the effects of the ACA phasing down federal payments to Medicare Advantage plans. More recently, proposed mergers between health insurance firms with large footprints in Medicare Advantage have raised questions about how the mergers could affect beneficiaries. This spotlight analyzes publicly available data to review the Medicare Advantage plans offered in 2016. It provides updated information describing how Medicare Advantage plan choices are changing in 2016, includes new information on premiums, out-of-pocket limits and other plan features, and examines the role of large firms offering plans in the marketplace. Findings include: The average Medicare beneficiary will be able to choose from 19 plans in 2016, a number which has been relatively stable since 2012. Relatively few plans are entering or exiting the Medicare Advantage market, and for the most part, the same plans that were available in 2015 will be available in 2016. While the average Medicare beneficiary can choose from many plans, these plans will be offered by a handful of firms. The average beneficiary will be able to choose from plans offered by six firms; one-quarter of beneficiaries nationwide will have a choice of plans offered by three or fewer firms in 2016. If enrollees in Medicare Advantage plans with prescription drug coverage (MA-PDs) stay in the same plan between 2015 and 2016, their premiums will increase by 8 percent, on average. Similar to past years, about four-fifths of beneficiaries (81%) will have access to an MA-PD with no premium in 2016. Plans' limits on out-of-pocket costs for Part A and B benefits will rise in 2016, as they have in prior years. Almost two-fifths (39%) of plans will have limits equal to the maximum allowed ($6,700 per year) in 2016, up from 17 percent in 2013. Nearly half (45%) of MA-PDs will impose a deductible for Part D prescription drugs in 2016, an increase from 2015, and the average Part D drug deductible will be higher in 2016 than 2015. The average quality star rating for plans will be higher in 2016, with substantial growth in the number of contracts with 4 and 4.5 stars.
This data spotlight examines availability and enrollment trends for Medicare Advantage Special Ne... more This data spotlight examines availability and enrollment trends for Medicare Advantage Special Needs Plans, which provide a managed care option for beneficiaries with significant or relatively specialized care needs. These plans account for a small share of Medicare enrollment today, but are viewed by some as a way to address coordination of care and costs issues for dual eligible beneficiaries enrolled in both Medicare and Medicaid.
This data spotlight examines trends in benefits and cost-sharing for Medicare Advantage plans in ... more This data spotlight examines trends in benefits and cost-sharing for Medicare Advantage plans in 2010, including the wide variations found across plans and the rapid increase in cost sharing requirements for some benefits, including stays in skilled nursing facilities. It also examines the annual limits on out-of-pocket spending set by most Medicare Advantage plans and the availability of coverage for drugs in the Medicare drug benefit’s coverage gap, or “doughnut hole.â€
An Accountable Care Organization (ACO) is a provider-run organization in which the participating ... more An Accountable Care Organization (ACO) is a provider-run organization in which the participating providers are collectively responsible for the care of an enrolled population, and also may share in any savings associated with improvements in the quality and efficiency of the care they provide. Although the concept of ACOs originated in the Medicare and commercial sectors, several states are actively developing ACO initiatives in an effort to improve the care provided to people through the Medicaid program. Our review of a number of state initiatives indicates that most Medicaid ACOs are currently at an early stage of development, as states engage in relatively lengthy planning and implementation processes, both to accommodate diverse stakeholder concerns and to address state and federal legislative and regulatory requirements. The structure of Medicaid ACO initiatives is influenced by individual states' history and experience with managed care, other existing care delivery arrangements within Medicaid, and the challenges inherent in serving low-income and chronically ill populations. While Medicaid ACOs are a strategy to more directly engage providers and provider communities in improving care, cost-containment is also a significant motivating factor for many states. It remains to be seen how states will balance short-term cost-containment pressures against the investments in partnerships and delivery system redesign necessary for the success of Medicaid ACOs over the longer term. Recently, a number of states have begun to explore the possibility of implementing Accountable Care Organizations (ACOs) in Medicaid. The ACO concept, which originated in the context of the Medicare
As part of the Medicare Modernization Act (MMA), Medicare Advantage (formerly Medicare+Choice, or... more As part of the Medicare Modernization Act (MMA), Medicare Advantage (formerly Medicare+Choice, or "M+C") health plans will receive payments over and above what they were slated to receive in 2004. The original rate increase, announced by CMS in May 2003, will remain in effect for January-February 2004. The higher payments are intended to help stabilize Medicare Advantage, in which recent drops in enrollment have been prompted largely by two factors: the withdrawal of health plans from the program and higher monthly premiums and cost sharing in plans that have stayed. Payments will continue to be set at the county level. More specifically, the bill requires plans to use the additional payments to (1) reduce enrollee premiums or cost sharing, (2) enhance benefits, (3) stabilize provider networks and/or (4) put the dollars in a stabilization fund for use later in order to offset potential future premium increases or benefit cuts. And although information on how plans are actually using the funds is not yet available, many plans have indicated that they plan to reduce monthly premiums or cost sharing. Since plans must use stabilization funds by the end of 2005, they may be reluctant to use that option. The analysis presented here examines the distributional effects of the MMA-mandated increases across Medicare beneficiaries, private plan enrollees, and U.S. counties. How the MMA Changed 2004 Payment Rates The MMA changed the methodology used to calculate county payment rates in 2004 and 2005 as a prelude to full implementation of the bill in 2006. Before the bill was passed, plans received the greatest of three county payment rate increases:
To expand the role of private managed care plans in Medicare, the Medicare Prescription Drug, Imp... more To expand the role of private managed care plans in Medicare, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) provided Medicare Advantage plans with significant increases in monthly payment rates, beginning March 2004. About one-half of the payment increases were used by plans to reduce enrollee premiums and cost-sharing and enhance benefits; providers received most of the rest. Premiums had already begun to decrease in the Medicare Advantage program in early 2004 for the first time in several years, but the payment increases led to further declines-average monthly premiums dropped from $34 to $25 after the increases. The payment rate increases also slowed the trend toward genericonly drug coverage. Overall, average out-of-pocket costs declined to 2003 levels, although managed care enrollees in good health experienced a higher percentage reduction in out-ofpocket spending than those in poor health.
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