The MSA Page

More Options Available To Medicare Beneficiaries In 1999

Recently the Department of Health and Human Services announced a regulation describing how health plans and organizations can become part of the new Medicare+Choice program.

Starting in January 1999, in addition to original fee-for-service Medicare and health maintenance organizations, a broader array of health plans will be able to join Medicare, including preferred provider organizations (PPOs), provider sponsored organizations (PSOs), private fee-for-service (PFFS), and a Medical Savings Account (MSA) demonstration project. These expanded health plan choices, known as Medicare+Choice, were created as part of the bipartisan Balanced Budget Act of 1997.

The regulation describes policies and standards that health plans and organizations must meet to participate in the Medicare+Choice program. The standards cover enrollment, benefits, access, beneficiary protections, quality assurance, provider protections, payment, premiums, and sanctions.

With publication of these standards, organizations may begin to apply to be certified as Medicare+Choice plans. Risk HMOs that already contract to enroll Medicare beneficiaries will be eligible to become Medicare+Choice plans on January 1, 1999.

To assist Medicare beneficiaries in making decisions about their care, HCFA is planning a comprehensive national information campaign designed to provide consumers with information about a available plans, answers to frequently asked questions, and additional information resources. The campaign will include a national Internet site -- currently being tested -- with comparative information on available plans. HCFA will also begin piloting in five states a toll-free hotline service to assist beneficiaries and continue focus group testing a comprehensive Medicare handbook, "Medicare and You." Beneficiaries will receive information this Fall regarding the new Medicare Medical Savings Account demonstration project and other Medicare health plan options. As many as 390,000 beneficiaries can join MSAs under that project.

While many Medicare beneficiaries will have a larger number of health plan options to choose from, no beneficiary is required to change the way they currently receive their care. "The Medicare program is moving into the new century of offering beneficiaries an unprecedented degree of choice about their health care while continuing to protect and strengthen original Medicare," say HHS Secretary Donna E. Shalala. "The Clinton Administration is proud of its record of expanding choice, assuring quality, and protecting the rights of patients in this changing health care system."

"Medicare+Choice offers beneficiaries new insurance options that broaden the ways in which they can receive health care. Importantly, that also includes the option to stay right where they are. If beneficiaries are happy with the way they get their health care now, they don't have to do anything," said Nancy-Ann DeParle, Administrator of the Health Care Financing Administration, the agency that administers the Medicare program.

Access to Medicare+Choice options will depend on where the beneficiary lives and what types of plans are available in the community. Among the options are:

  • Health Maintenance Organizations (HMOs). In HMOs, beneficiaries must obtain services from a designated network of doctors, hospitals, and other health care providers who have agreed to serve plan enrollees, usually with little or not out-of-pocket payments.

  • Health Maintenance Organizations with a Point of Service (POS) Option. When combined with a basic HMO package, the POS permits beneficiaries to selectively go out of network to receive services, with higher out-of-pocket payment requirements.

  • Preferred Provider Organizations (PPOs). Beneficiaries in PPOs obtain services from a network of health care providers that has been set up by the health plan. Unlike an HMO, beneficiaries can choose to go to providers who are not in the network and the plan will pay a percentage of the costs while the beneficiary is responsible for the rest.

  • Provider-Sponsored Organizations (PSOs). PSOs are a relatively new form of managed care that work much like an HMO, except that they are formed by a group of hospitals and doctors who directly take on the financial risk of providing comprehensive health benefits for Medicare beneficiaries.

  • Private Fee-For-Service Plans (PFFS plans). The Medicare beneficiary elects a private indemnity-type insurance plan. The insurance plan, rather than the Medicare program, decides how much to reimburse for services provided. Medicare pays the private plan a premium to cover traditional Medicare benefits. Providers are allowed to bill beyond what the plan pay (up to a limit), and the beneficiary is responsible for paying whatever the plan doesn't cover. The beneficiary may also be responsible for additional premiums.

  • Medical Savings Accounts (MSAs). Congress has authorized up to 390,000 Medicare beneficiaries to participate in a MSA demonstration. The beneficiary chooses a Medicare MSA Plan -- a health insurance policy with a high deductible. Medicare pays the premium for the MSA Plan and makes a deposit into the Medicare MSA that is established by the beneficiary. The beneficiary uses the money in the Medicare MSA to pay for services provided before the deductible is met and for other services not covered by the MSA Plan. Unlike other Medicare plans, there are no limits on what providers can charge above the amount by the plan.

  • Medicare MSA Plan. Unlike other Medicare+Choice options, individuals who enroll in MSAs are locked in for the entire year, with a one-time option of withdrawing by December 15 of the year in which they enrolled.

These options should expand the choices available to Medicare beneficiaries, particularly in rural areas. Currently, 17 percent of Medicare beneficiaries are in managed care plans. It is expected that by 2005, approximately 30 percent of all Medicare beneficiaries will be enrolled in Medicare+Choice plans.

Beneficiaries will get information from a variety of sources including written materials, a consumer friendly Internet site, a toll-free number staffed by live operators (to be phased in between October 1998 and October 1999) and through Medicare's partners, including employers, unions, and advocacy organizations for seniors.

Other key provisions in the regulation:

  • Annual coordinated election period. Beneficiaries will receive information about their plan choices annually each Fall beginning in 199. The regulation specifies the types of information that will be provided to consumers to help them make appropriate choices. Beneficiaries will have the availability of continuous open enrollment until 2002, when there will be an opportunity for beneficiaries to make one change of health plans within the first six months. In 2003 and subsequent years, they will have one opportunity to change plans within the first three months.

  • Benefits and premiums. Each plan must offer uniform benefits and premiums and cost sharing to all Medicare beneficiaries throughout its service area. Plans may designate service areas.

  • Consumer protections. The regulation responds to President Clinton's promise to extend the Patients' Bill of Rights to all Medicare beneficiaries. Women will have direct access to women's health specialists within the network for routine and preventive care. Also, all Medicare+Choice plans must have procedures for the identification, assessment, and development of treatment plans for persons with complex needs.

  • Appeal rights. The new rules shorten the time that a plan may take to decide a patient's appeal of a decision or deny, reduce, or terminate care. All reviews will now need to be conducted as expeditiously as the beneficiary's health condition dictates (expedited decisions must generally occur within 72 hours). The maximum time for initial decisions on appeals is reduced from 60 to 14 days, and for reconsiderations is cut from 60 to 30 days.

  • Quality assurance. All Medicare+Choice plans must report on standardized quality performance measures for the purposes of consumer information, and plans with provider networks must achieve performance levels on standardized quality measures and conduct performance improvement projects in specified areas.

  • Risk-adjustment data. The regulation lays out a timetable for the collection of encounter data for hospital inpatient and other services that will be used to develop a new risk adjustment system that will adjust payments to Medicare+Choice organizations for patients' health status beginning in the 2000.

Thanks to the Health Benefits Group for providing the above information. Medicare+Choice was established by the Balanced Budget Act of 1997.

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