Slide 1: Medicare Advantage

Emily Cook
U.S. Department of Health and Human Services
Health Resources and Services Administration
Office of Rural Health Policy
January 29, 2006

Slide 2: The Basics

• Part C of Title XVIII of the Social Security Act
• HMOs became an option under Medicare in 1972
• Expanded to include additional plan types and incentives as "Medicare+Choice" in 1997 by the Balanced Budget Act
• Volatile market for plans and beneficiaries with many plans withdrawing after short periods and offering overly generous and unsustainable benefit packages

Slide 3: Medicare Advantage

• New name created in 2003 by the Medicare Modernization Act
• Some changes from Medicare+Choice
• Addition of Regional Preferred Provider Organizations (RPPOs)
• Special Needs Plans
• Financial incentives and changes in payment rates
• Requirement to include Part D Rx benefits in at least one benefit package
• Expected to increase plan participation and beneficiary enrollment in rural areas

Slide 4: RPPOs

Image: Map of the MA regions

Slide 5: RPPOs

• Encourages plan offerings in rural areas by requiring an entire region be covered
• Multiple payment incentives to encourage plans to enter the market
• Benefits and premiums must be uniform for entire region
• Available in all regions except AK, NM/CO, OR/ID, NH/ME, VT/MA/CT/RI

Slide 6: Local Plans

• Changes in payment rates to attract more plans
• No new local plans in 2006 and 2007
• Increase in plans available in rural areas- particularly Private Fee-for-Service (PFFS) and PPO plans

Slide 7: Provider Issues

• Except for PFFS and MSA plans, providers must sign contracts to be in plan networks
• Each contract must be negotiated separately
• Rural providers do not have much experience dealing with plans
• Plans and providers are confused by payment requirements

Slide 8: Provider Choices

• Sign contract with plan
• Accept rate offered
• Negotiate rate closer to FFS payment
• Negotiate covered services
• Do not sign contract with plan
• Beneficiaries in plan subject to higher cost sharing
• Payment rates are confusing
• In area with plans, but no contract offered

Slide 9: Provider Consequences

• Sign Contract with Plan
• Rates below or above FFS rates
• Contract may not cover all services/costs currently covered by Medicare
• Beneficiaries can receive services at lower rate and may receive more services
• Do not Sign Contract
• Beneficiaries in plans may be subject to higher cost sharing
• May go elsewhere for care
• Payments from plan may require appeals

Slide 10: The Exceptions

• RPPOs
• Relaxed network standards
• "Essential" hospitals
• FQHC wrap-around
• PFFS
• "Deemed" providers

Slide 11: Beneficiary Issues

• Enroll in a Medicare Advantage Plan
• Many (perhaps too many) plans to choose from in most areas- even rural
• Plan networks are still being established and can be difficult to identify
• Benefits and cost savings can make plans very attractive
• Stick with "Original" Medicare
• Beneficiaries do not have to join a plan

Slide 12: Beneficiary Consequences

• Join a Plan
• Can only switch plans once a year
• May be subject to higher cost sharing at certain providers
• Some plans can "manage" care
• Stick with "Original" Medicare
• No opportunities for additional services or reduced cost sharing

Slide 13: The Exceptions

• Special Needs Plans
• May be able to change plans once a month
• RPPO
• May be able to see out-of-network providers at in-network rates

Slide 14: Plan/CMS Issues

• Enter uncertain market
• Many areas have little or no experience with managed care
• Costs and enrollment are unpredictable
• Financial incentives to lessen both positive and negative impacts
• Offer more choice to beneficiaries
• Beneficiaries cannot benefit from choice if there are none available

Slide 15: What Does This All Mean?

• Current environment is confusing, uncertain and very complex
• Multiple inter-related issues that need to be followed and analyzed
• Issues are legislative, regulatory and sub-regulatory
• Tremendous pressure to "make this work"

Slide 16: Where to Focus

• Need to determine if breadth or depth is more important
• Not a lot of data to work with yet
• Issues viewed as problems by one group may not be problems to another
• Provider finances and beneficiary access are at odds in many areas

Slide 17: Some Ideas

• Identify providers in need of protections and who should provide them
• Determine what beneficiaries should know before enrolling and how to help them understand the issues
• Determine if beneficiary choice in rural areas is worth the cost to providers and/or plans

Slide 18: Contact

Emily Cook
ecook@hrsa.gov
301-443-0502