MSAs: Insurers Not Ready For New Medicare Option

      Saturday's Washington Times reported that "not a single company met" the August 15 deadline "for applications to begin selling" medical savings accounts to seniors when the new Medicare option becomes available this November. According to the Times, the blame for the problem lies with the Clinton administration, which is unprepared to begin offering new health plan options to seniors under the Medicare+Choice program. Final regulations for the options "were not completed until June 27," even though the program is set to take effect this fall. "Many plans and insurers have shown strong interest in the Medicare+Choice options, but so far few have submitted applications," said Dr. Robert Berenson, director for health plans and providers at the Health Care Financing Administration.

MSA Shy
      Under the Medicare+Choice MSA option, the government is authorized to "pay the premiums for 390,000 seniors to buy catastrophic health insurance with a deductible of up to $6,000." Seniors will be able to keep "the balance" of their MSA "if they don't spend it all on deductibles" for health care services. But according to the Times, insurers "aren't rushing to file applications" to sell MSAs to seniors. Golden Rule Insurance Co.'s Brian McManus said, "Our actions will depend on getting through the review of the regulations." McManus' company is a leader in selling MSAs in the non-Medicare market. A HCFA spokesperson indicated that "the agency is flexible on its application deadline and still might be able to grant marketing approvals in time to allow companies to begin offering MSAs in November."

Other Medicare+Choice Options
      The Times reported that "[o]nly two companies have sought federal approval to market new provider sponsored organizations ... beginning in January and only one company has signed up to launch a preferred provider organization" for Medicare recipients. HCFA's Berenson "said he expects many more health plans to offer new products under the Medicare choice program within the next two years." But the Times notes that one "challenge" to groups wanting to offer PSOs "will be winning higher monthly payments from HCFA," which "has set a floor of only $389 per patient per month for fiscal year 1999 ... even though consultants say it's not possible to offer coverage at less than $450 per month." American Hospital Association's Ellen Pryga said, "If the rate isn't raised you won't be able to offer additional benefits beyond the basic Medicare package to convince people to enroll unless you want to bankrupt yourself" (Goldreich, 8/22).