The New Private Medicare Plans
The sales pitches are back, enticing seniors to join HMOs and other private health plans. Congress has changed the law again, this time to encourage firms to offer these alternative plans to regular Medicare.
In 1997 Congress reduced reimbursements to Medicare HMOs and other private Medicare plans. As a result, many HMOs stopped participating and dropped three to four million seniors from their rolls. Others reduced benefits or increased charges to members.
Now, the government plans to increase reimbursements by $46 billion over 10 years. Average HMO reimbursement rates will increase this year by more than 10%, compared with 2% increases in prior years. HMOs in some areas have seen increases of much more than 10%.The law requires the increased payments to be used to reduce costs, increase benefits, or boost payments to doctors and hospitals.
Currently, about 10% of Medicare participants are in private plans; the government expects one third to be in private plans within three years thanks to the higher reimbursements.
Private insurers are taking the bait. Some that dropped out of Medicare are returning, with more attractive plans than they used to offer. Those that didn’t leave are offering more benefits at lower cost. If you live in a populous area, especially one with a lot of seniors, you probably have received numerous promotions for the new plans. In some areas, seniors are offered free lunches at which plan benefits are explained.
The new private plans are known as Medicare Advantage plans. They offer more benefits than traditional Medicare at lower cost to participants. A private plan is likely to completely cover routine physicals and offer generous prescription drug benefits. Many plans are reducing or eliminating their premiums for seniors (which had increased steadily over the last few years). Some private plans also will cover part of or the entire Medicare premium for members.
Another benefit is that the law was changed so that seniors can switch from traditional Medicare to private plans at any time during the year, at least until 2006. Previously, changes could be made only during an “open season” late in the year. That’s why a lot of advertising is taking place now.
Of course, the private plans have some disadvantages. Medicare will cover care from any doctor or hospital. Medicare Advantage plans usually limit members to doctors and hospitals who have joined their networks and agreed to accept the plans’ reimbursement rates.
Before joining a private plan, seniors should recognize the possibility that the government reimbursement rates again might change. Then, plan sponsors might decide the reimbursement rates are not high enough. The private firms might withdraw from Medicare as they did after the 1997 changes.
The private plans are not available to everyone. The private companies tend to offer the plans in populous urban and suburban areas. About one third of the counties in the country are not served by private plans.
If you are considering a private plan, don’t limit yourself to those plans doing the promoting. You can get a list of providers in your area and some plan details at the Medicare web site (www.medicare.gov) or by calling Medicare at 800-MEDICARE.
Carefully compare the plans with each other and with Medicare. Determine which doctors and hospitals participate to see if you will have to change care providers. Find out what is required if you want to see a specialist.
Don’t be lulled by broad talk of prescription drug benefits. Many plans have “preferred lists” of drugs that get their regular coverage. If you take certain drugs or have reason to believe you might need them in the future, find out how those medicines will be covered. Your medicine might not be covered, or you might need to take an alternate or generic version.
Also, ask where you have to buy the medicine. Some plans require mail order for maintenance drugs or contract with only a few local pharmacies.
More questions to ask about HMOs are on the Medicare web site or available by calling 800-MEDICARE. Your State Health Insurance Counseling and Assistance Program also can help. You can find it by calling your state insurance department or office on aging or by calling Medicare.
Another consideration is Medigap insurance, also known as Medicare supplemental insurance. If you leave Medicare for a private plan and are dropped by the private plan, you have some guarantees about returning to Medigap coverage for at least 63 days with no premium increase. But if you drop the private plan, you can get back into regular Medicare but have no guarantees about obtaining Medigap coverage or what its cost might be.
