http://online.wsj.com/article/SB127336164057988979.html
By ANNE TERGESEN
Our recent column about the impact of new health-care legislation on Medicare prompted many readers to ask about the specific effects on Medicare Advantage programs, which currently cover about a quarter of Medicare recipients.
With Medicare, individuals must choose one of two paths: original fee-for-service Medicare, or a federally subsidized private Medicare Advantage plan, which typically operates like a health-maintenance or preferred-provider organization.
Over the next 10 years, the new health-care law will divert some $132 billion from Medicare Advantage, according to a recent report by George Washington University's Department of Health Policy. This has sparked concern that these plans may reduce benefits, raise premiums, or both.
But the impact is likely to vary from plan to plan. Medicare currently pays Medicare Advantage plans an average of 13% more than the cost of covering the same beneficiaries under traditional fee-for-service Medicare. After the cost cuts are fully implemented, Medicare Advantage plans will still receive slightly more -- about 1% extra overall, according to George Washington University.
But depending on whether Medicare costs in your county are high or low, your plan could receive anywhere from 5% less to 15% more than the average cost of original Medicare in your area. (Plans in low-cost areas are generally rewarded with reimbursements that are more generous relative to local Medicare costs.)
The spending cuts will phase in over time. This year, no cuts will be made. In 2011, payments will be frozen at current levels. Starting in 2012, the cuts will phase in over two to six years, says Paul Precht, director for policy and communications of the nonprofit Medicare Rights Center. Plans slated for the steepest reductions will experience the longest transition times, he adds.
Under the new system, Medicare Advantage plans that perform well on certain quality measures will receive modest bonuses -- to be used, in part, to provide extra benefits. To see how your plan measures up, go to medicare.gov and look up the quality ratings published by the Centers for Medicare & Medicaid Services, Medicare's administrator. Search under "Find & Compare Health Plans." (Plans receiving 3.5 to 5 stars will be rewarded.)
Starting in 2011, Medicare Advantage plans also must cap at $6,700 recipients' maximum annual out-of-pocket expenditures for services covered under Medicare. (Some PPOs will be able to impose a higher $10,000 annual limit for both in- and out-of-network services.) Currently, about one-third of Medicare Advantage plans don't have such caps.
Advantage plans will be barred from charging higher copayments or coinsurance rates for certain services, including chemotherapy, than patients would pay under original Medicare.
Also starting in 2011, Medicare Advantage participants who want to switch to another Advantage plan will have to do so in Medicare's six-week annual election period from Nov. 15 to Dec. 31. Previously, participants also were permitted to make a switch between Jan. 1 and March 31 of the following year.
Write to Anne Tergesen at anne.tergesen@wsj.com
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A Wall Street Journal reader commented as follows:
This is a good overview of what the future holds for Medicare Advantage. The question that readers should ask for their own personal situation; is it better to stick with the traditional Medicare Supplemental Insurance plan vs. a Medicare Advantage plan. Given the looming premiums increases in Medicare Advantage, the Medicare supplement may be the better choice in many areas. Of course specific premiums and benefits will be the determining factor. For information on both follow the links to www.mysenioradvisorsgroup.com for specific plan information in your area.
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To understand Medicare Supplemental Insurance, see http://www.medicare.gov/publications/pubs/pdf/02110.pdf
