Before the Medicare Modernization Act of 2003 (MMA), private plan options for beneficiaries had eroded substantially, with severely limited or no choice in most communities.
A new
publication from Mathematica Policy Research's series on Medicare+Choice reviews the MMA's attempts to breathe life into troubled Medicare markets in the six communities that Mathematica tracks - Albuquerque, Baltimore, Detroit, New Orleans, Orange County (CA), and Orlando, noting slight improvements in benefit packages and premium reductions in some communities.
Prior to the MMA, private plan offerings declined in all six markets. In 1998, each of the six markets had at least four health maintenance organization (HMO) choices, and three markets had eight or more choices. More than 1 in 10 beneficiaries were in HMOs in all of the markets except Detroit. By 2003, only Orange County had four or more Medicare private plan choices, and Baltimore and Detroit effectively had none. In addition, market penetration fell to single digits in three markets: 7 percent in Orlando, 3 percent in Detroit, and less than 1 percent in Baltimore.
The MMA authorized a number of changes in the Medicare+Choice program, which included renaming it Medicare Advantage and increasing payment rates to plans for 2004. Under the MMA, plans now receive at least 100 percent of traditional Medicare payment in the counties where they provide services. A new method for calculating annual updates guarantees plans an increase of at least 6.3 percent for 2004 (versus 2 percent in each of the previous years).
Plans must use the increased payments to reduce enrollee premiums or cost sharing, enhance benefits, stabilize provider networks, and/or put the dollars in a stabilization fund to offset potential future premium or cost-sharing increases or benefit cuts. Plans in four markets chose to use some of the increase to reduce premiums or cost sharing, and plans in all six markets chose to enhance their benefits by improving drug coverage. Only one plan interviewed was considering putting the extra money in a stabilization fund.