Obama administration sets new rules for Medicare Advantage plans
31 03 09 - 11:05
U.S. Acts to Ease Costs of Private Medicare Plans
By JANE ZHANG - The Wall Street Journal
WASHINGTON -- The Obama administration set new terms for private Medicare plans that are aimed at protecting sick patients from paying high charges and giving consumers a clearer idea of what the plans cover.
The changes, announced Monday by the Centers for Medicare and Medicaid Services, the federal agency that manages Medicare, are part of conditions that insurance companies must meet if they want to bid on Medicare insurance business this year.
Administration officials said the changes are intended to weed out certain out-of-pocket costs charged by Medicare Advantage, the private version of the federal health-insurance program for the elderly. Medicare Advantage plans, they said, will face more government scrutiny if they don't cap a patient's annual out-of-pocket costs at $3,400 or less, or if they charge patients more than traditional Medicare does for dialysis, home health care and other services. If the government deems the charges too high, insurers will be asked to scale them back.
In addition, insurers won't be allowed to charge sick, low-income patients more than what they would pay under traditional Medicare.
The changes represent the first steps by President Barack Obama's administration to rein in Medicare Advantage. Mr. Obama has criticized the private plans for spending too much while doing too little to care for the nation's elderly and disabled. He has proposed cutting payments to those plans to help pay for a health-care overhaul.
Medicare Advantage, which has about 10 million enrollees, wraps physician and hospital services in one. Unlike traditional Medicare, the government doesn't pay providers directly but instead pays insurance plans to manage care.
Additionally, the administration will eliminate about 1,400, or 27%, of Medicare Advantage plans in an effort to make it easier for beneficiaries to compare options. It is targeting those plans with fewer than 10 enrollees that are similar to other plans.
For drug plans, insurers will have to describe their coverage of the "doughnut hole" -- the gap where consumers generally must begin paying the full cost of their medicines -- in simple terms.
"By strengthening our oversight efforts, we are protecting beneficiaries and taxpayers by ensuring that the data provided by plan sponsors is reliable and correct," said Jonathan Blum, CMS's acting director of the Center for Drug and Health Plan Choice.
"This is a vivid illustration that the program is under new management," said Dan Mendelson, president of Avalere Health, a Washington consulting firm.
Write to Jane Zhang at Jane.Zhang@wsj.com