Thompson Touts Benefits of Medicare Advantage Plans

HHS Secretary Tommy Thompson on Wednesday said that based on applications for 2005, increased reimbursement rates for HMOs and other managed care companies that offer Medicare Advantage plans provided under the new Medicare law likely will lead to reduced costs and improved services for beneficiaries, the AP/Detroit Free Press reports. Thompson said that monthly premiums and copayments for beneficiaries who enroll in Medicare Advantage plans likely will decrease by an average of 10% in 2005. In addition, he said that many Medicare Advantage plans have proposed to expand coverage of prescription drugs, as well as dental, vision and preventive services, for average monthly savings of $23 for beneficiaries (Sherman, AP/Detroit Free Press, 10/7).

Thompson also said that beneficiaries who enroll in Medicare Advantage plans likely will spend at least $90 less monthly than under fee-for-service Medicare (CQ HealthBeat, 10/6). In the past, several studies have found that Medicare Advantage plans cost the federal government at least 7% more than fee-for-service Medicare. According to the AP/Free Press, the announcements from Thompson mark the Bush "administration's latest effort to counter criticism" about the Medicare law, which opponents have said "shortchanged patients and was overly generous to insurers and drug makers" (AP/Detroit Free Press, 10/7).

According to Thompson, the applications for 2005 also indicate that 35 new Medicare Advantage plans have proposed to begin offering coverage for beneficiaries and the 22 current plans have proposed to expand the number of counties in which they operate. Approval of the applications would expand access to Medicare Advantage plans to an additional 1.6 million beneficiaries in 93 counties in 11 states, Thompson said. About five million of 41 million beneficiaries currently are enrolled in Medicare Advantage plans.

However, "even with the increased number of plans, one third of Medicare beneficiaries still will lack access to even a single Medicare Advantage plan," CongressDaily reports. About 66% of beneficiaries likely will have access to Medicare Advantage plans in 2005, compared with 62% in 2004 and 59% in 2003 (Rovner, CongressDaily, 10/7). About 20% of beneficiaries in rural areas likely will have access to Medicare Advantage plans in 2005, compared with 16% in 2004 (HHS release, 10/6). CMS Administrator Mark McClellan said he expects more beneficiaries to enroll in Medicare Advantage plans in 2006, when less restrictive Medicare "regional Preferred Provider Organizations" become available (CongressDaily, 10/7). Thompson said, "We made an investment in seniors and it is paying off with greater access to health care at more affordable costs," adding, "Under President Bush's leadership, we are reversing a trend of seniors losing access to Medicare Advantage plans each year to an environment where plans are expanding coverage and lowering costs" (HHS Release, 10/6).

Meanwhile, Senate Democrats on Wednesday released a new report from the Government Accountability Office that found brand-name prescription drug prices have increased 26.4% over the past four years. They said that the report provided new evidence in support of the need to pass legislation before the November election to legalize the reimportation of lower-cost prescription drugs from abroad and allow Medicare to negotiate directly with pharmaceutical companies on medication prices (AP/Detroit Free Press, 10/7).

McClellan said that a federal reimportation task force is "still analyzing data" on the issue and will release a report later this year (CongressDaily, 10/7). Thompson added that lawmakers likely will re-examine the Medicare law after the election, adding, "I'm confident that, come January, there are going to be a lot of converts" (AP/Detroit Free Press, 10/7).