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Advantage plans: Fewer is better

By Dave Gulliver
10/15/2010 Health News Florida

Florida seniors searching for a Medicare Advantage plan this fall will find fewer choices than last year -- and that’s a good thing, advocates say.
 
During the debate over health care reform, critics in the insurance industry and Republican Party argued that the law would leave people with no chance to sign up for the popular, privatized Medicare plans. So far, though, that’s not the case.
 
A Health News Florida analysis of federal Medicare data found insurers offering 206 different plans in the state’s 67 counties. That’s down from 281 plans offered last year.

But it leaves Floridians with abundant choices when enrollment opens on Nov. 15. Every county has at least six Advantage plans available, and some counties have far more. Broward residents can choose from 55 offerings, down from 71 last year.

And the price is right. Combined premiums -- what plans charge for health and prescription coverage -- have dropped. Most Advantage plans in Florida charge nothing in addition to beneficiaries’ Medicare premiums. But those that do have cut their prices, from a median of $82 this year to $60 next year.
 
Medicare experts say the fewer choices are an improvement. The huge variety made it too difficult for people to find the best or lowest-cost plans. The health care reform law pressed insurers to close low-enrollment plans and convert their high-cost fee-for-service plans to other structures.
 
“If you go down the cereal aisle when you go grocery shopping, you know there’s such a thing as too much choice,” said Vicki Gottlich, senior policy attorney at the Center for Medicare Advocacy in Washington, D.C.
 
She points to multiple studies, by the Kaiser Family Foundation, Harvard School of Public Health and other researchers that find Medicare beneficiaries have trouble picking the best or least expensive plan for them.
 
In one, beneficiaries tended to feel overloaded when they had eight or more options. In other studies, anywhere from 44 to 90 percent of beneficiaries were unable to choose a drug plan that gave them the lowest prices.
 
The winnowing of the Medicare Advantage herd also leaves seniors with the best plans, Gottlich said. The health care reform law has forced changes in a class of plans known as private fee-for-service. In theory, they allowed members to see any doctor -- but many physicians would not accept the plans and the patients.
 
The plans tended to have the most costly and lowest quality care, with expenses running about 15 percent more than traditional Medicare and no structure to coordinate care, Gottlich said. Now, those plans must have networks of doctors, much like HMOs or PPOs, preferred provider organizations.
 
That change accounts for much of Florida’s drop in plans, from 66 PFFS plans in 2010 to 29 available next year. Humana, which offers more Advantage plans in Florida than any other insurer, cut its PFFS offerings almost in half, from seven in 2010 to a planned four in 2011.

But Humana will offer more plans in 2011 than it did last year, even as lower premiums are prompting some insurers, mostly smaller companies, to withdraw from Florida markets.

“Some of the smaller plans may have made a strategic decision to withdraw from certain counties,” said Dr. Scott Latimer, president of Humana’s senior products in central and north Florida.
 
The company is positioning itself for the reform law’s ongoing overhaul of Medicare Advantage. The law calls for bonuses for top-performing plans, which has Humana establishing systems to monitor and document quality of care, he said.
 
Humana also is preparing for the reform law’s reduced base payments to plans. It has created its first “refund” plan, that refunds the premiums that beneficiaries pay for Medicare -- usually $96.40 a month.

It also has a partnership with Wal-Mart to market a prescription drug plan, which at $14.80 a month it claims is the lowest price in the country. Humana hopes that drug plan will open “discussions” about its Advantage plans, he said.

--Dave Gulliver is an independent journalist in Sarasota and founder of Sarasota Health News.