Medicare Advantage Enrollment to Rise, Premium Costs Dip

Enrollment in Medicare Advantage plans, which provide services to about a quarter of the nation's Medicare beneficiaries, is predicted to go up by about 5% in 2011, while premiums on average will dip by 1% from this year, the Centers for Medicare & Medicaid Services (CMS) announced Tuesday.

While the monthly premium decrease is small—from an average of $36.14 this year to $35.69 in 2011 (a 45-cent reduction)—the drop was unexpected among those who follow the Medicare program. For 2010, the plans saw on average a 15% increase in premium costs. CMS officials said they held down rate increases by negotiating with the insurers that sponsor the Medicare Advantage plans.

"Despite the claims of some, Medicare Advantage remains a strong, robust option for millions of seniors who choose to enroll or stay in a participating plan, said CMS Administrator Donald Berwick, MD. "The Affordable Care Act gave us new authority to negotiate with health plans in a competitive marketplace."

CMS Deputy Administrator Jonathan Blum said the administration negotiated with 300 Medicare Advantage plans to push down proposed premiums and cost-sharing increases that Medicare considered too high—bringing them "into more affordable ranges," he said.

With negotiations, the plans improved their benefits by about 5% (or about $13 per member per month) on average. However, seven Medicare plans offered by three insurers declined to change their bids, and CMS denied those bids, Blum said.

Aside from the new healthcare reform bill giving CMS officials new power to negotiate, CMS now can take steps to:

• Consolidate low-enrollment and duplicative plans so beneficiaries have "meaningful differences" between plans offered by the same organization.
• Set limits on out-of-pocket expenses.
• Cover preventive services with no cost sharing.
• Limit plan cost-sharing for skilled nursing care, chemotherapy, and renal dialysis to the amounts paid by beneficiaries in original Medicare.

The projected increase in Medicare Advantage beneficiaries will occur a year before Medicare will freeze payments to the plans, as stipulated under the new healthcare reform legislation. Blum attributed the increased membership to insurers providing "better value for beneficiaries."

However, even with lower costs, all beneficiaries should review their current health and drug plans coverage and shop around for what's available and meets their needs for next year, said Blum, who is also director of CMS' Center for Medicare. The new enrollment period is open from Oct. 1 through Nov. 15.

Nearly the same rate of Medicare beneficiaries who have access to a Medicare Advantage plan today will have access to a Medicare Advantage plan in 2011 (99.7%), according to CMS. About 5% of non-employer beneficiaries enrolled in Medicare Advantage and stand-alone prescription drug plans will need to choose a new health plan or original Medicare in 2010 because their current plan is not renewing their contracts with Medicare in 2011.

Most of these "non-renewals" occurred when private fee-for-service plans made business decisions to leave Medicare in certain areas of the country—largely because of a 2008 law that ensures protections for beneficiaries enrolled in these plans in certain areas of the country. All but 2,300 enrollees in Medicare Advantage plans that no longer participate in Medicare will have a choice of enrolling in a different plan.