Medicare Advantage health plans will receive a 6.6% rate increase overall in fiscal 2005, beginning Oct. 1, and plans operating in about one-fifth of counties will receive even more to remain competitive with fee-for-service Medicare, the CMS said. Medicare Advantage rates already climbed an average of 10.6% in March of this year. Both increases carry out provisions of the Medicare Modernization Act, which earmarked $500 million in 2004 and $800 million in 2005 to stabilize the Medicare managed-care program. Prior to the law, Medicare plans were scheduled to receive payment increases of 3.2% through 2004. Announcing the rate increase, CMS Administrator Mark McClellan said, "One of main changes we're seeing . . . as a result of payment increases is plans taking more steps to enhance their provider networks to cover more hospitals, docs and physician groups than they have before."
In conjunction with the rate announcement, the CMS reported that Medicare Advantage beneficiaries spend 34% less out-of-pocket on medical care on average than beneficiaries in fee-for-service Medicare. Other changes in fiscal 2005 include increased risk-adjusting of payments, so that 50% of Medicare Advantage payments will be risk-adjusted, up from about 30% currently. "These payment modifications substantially redirect payments to plans that care for the sickest beneficiaries," the CMS said in a news release. Roughly 4.6 million Medicare beneficiaries are enrolled in Medicare Advantage plans, previously known as Medicare+Choice. Read CMS information on the rates. -- by Jeff Tieman