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1991.04.25 :  Medicare Medigap Policies

Contact:  Bob Hardy (202) 245-6145
April 25, 1991

       HHS Secretary Louis W. Sullivan, M.D., announced today
that in June he will designate 15 states in which Medicare
beneficiaries will be able to purchase Medigap health insurance
policies that use preferred provider networks.  The new policies
will be known as Medicare SELECT. 
       Medicare beneficiaries choosing to purchase Medicare
SELECT policies "could expect to receive Medigap coverage for
premiums lower than those charged for standard Medigap policies,"
Secretary Sullivan said.
       Medigap insurance policies pay the beneficiaries' share of
costs, such as deductibles and coinsurance, for Medicare-covered
services. Nearly 45 percent of Medicare beneficiaries purchase
this supplemental private insurance coverage.
       To achieve lower premiums, Medicare SELECT plans will
enter into agreements with providers that agree to assure
appropriate utilization and deliver cost-efficient and high-
quality care.
       The 15 designated states will approve Medicare SELECT
policies, subject to guidelines developed by the National
Association of Insurance Commissioners.
       Secretary Sullivan invited insurers and state insurance
commissioners to consider the Medicare SELECT option and express
their interest not later than May 15.     

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       The Medicare SELECT option, authorized by the Omnibus
Budget Reconciliation Act of 1990, will begin next Jan. 1 and
continue for three years. Gail R. Wilensky, Ph.D., administrator
of the Health Care Financing Administration, explained that "our
intent is that Medicare SELECT plans eventually be available in
all the states."
       Dr. Wilensky said that "more than 60 million Americans
receive health services through preferred provider organizations.
We believe the preferred provider option must be available to 
Medicare beneficiaries seeking the best values in Medigap
insurance."
       She emphasized that Medicare SELECT policies will cover
emergency health care services furnished by providers outside the
preferred provider networks.  However, beneficiaries enrolled in
Medicare SELECT will receive full supplemental benefits only if
they use preferred providers.  Medicare benefits will not be
affected by the choice of providers.
       State insurance commissioners and insurers may express
interest in Medicare SELECT by phoning Edmund C. Moy, director of
HCFA's Office of Coordinated Care Policy and Planning, at 202-
619-0815.


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