Seniors flock to private Medicare plans
Pittsburgh Post-Gazette, August 29th, 2006
Hundreds of thousands of seniors are signing up for a type of privately
run Medicare plan that delivers traditional benefits without the usual
restrictions on access to doctors and hospitals. In turn, some of the
nation's biggest health insurers are launching more such plans and
marketing them in more areas.
The plans, called private fee for service, are a type of privately run
Medicare alternative known as Medicare Advantage. Advantage plans wrap
physician and hospital services in one, some with additional benefits.
Instead of paying beneficiaries' claims directly, the federal
government pays insurance companies to manage the care, with the hope
of reducing Medicare spending. To entice seniors to sign up, costs for
private plans are cheaper on average than those for traditional
government-run Medicare.
But recently such plans have become an even better deal. As part the
sweeping law that created the new Medicare prescription-drug benefit,
Congress raised the government's reimbursement rates to companies
offering Medicare Advantage plans to about $10,000 per enrollee per
year. That has led insurers, eager to bring in the new business, to
offer Advantage plans with lower premiums but often more benefits, such
as vision or prescription drugs.
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