Medicare Compliance & Reimbursement

The good news means more plans may join Medicare Advantage in the future.

Under payment rules enacted in last year's prescription-drug law, Medicare private health plans will likely see a 6.6 percent annual reimbursement increase for 2005, up considerably from the 2 percent increases many plans have experienced in recent years.
 
The final number will not be announced until May 10, but the Centers for Medicare & Medicaid Services announced March 26 that it projects an average 6.6 percent per capita growth rate for Medicare Advantage plans next year. Under the new Medicare law, beginning with revised rates for 2004, a plan's minimum percentage increase over the previous year's rates will be 2 percent or the national per capita growth percentage, whichever is greater.

On the strength of the 2004 revised payment rates, private insurers are slowly creeping back into Medicare, a trend CMS predicts will continue under next year's rates. CMS has approved six new Medicare Advantage organizations and 14 service-area expansions since December, and 10 more new plans and 10 service-area expansions currently are pending approval, says the agency.

The announcement was hailed by health plans. "Beneficiaries are already reaping the benefits of the improved funding for the Medicare Advantage program this year, with 3.7 million seeing improved benefits, 1.9 million seeing lower premiums, and 2 million seeing lower out-of-pocket costs," said Karen Ignagni, president of America's Health Insurance Plans. "The funding for 2005 will allow Medicare Advantage plans to build on this foundation and expand opportunities for beneficiaries to receive affordable, comprehensive benefits under the Medicare Advantage program."