Medicare+Choice (CRS Report for Congress)
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| Release Date |
June 6, 2003 |
| Report Number |
RL30702 |
| Report Type |
Report |
| Authors |
Hinda Ripps Chaikind and Madeleine Smith, Domestic Social Policy Division |
| Source Agency |
Congressional Research Service |
Summary:
Medicare has a long-standing history of offering its beneficiaries an alternative to the traditional
fee-for-service program. Health Maintenance Organizations and other types of managed care plans
have been allowed to participate in the Medicare program, beginning with private health plans
contracts in the 1970s and the Medicare risk contract program in the 1980s. Then, in 1997, Congress
passed the Balanced Budget Act of 1997 (BBA, P.L. 105-33 ), replacing the risk contract program
with the Medicare+Choice (M+C) program. The M+C program established new rules for beneficiary
and plan participation, along with a new payment methodology. In addition to controlling costs, the
M+C program was also designed to expand private health plans to markets where access to managed
care plans was limited or nonexistent and to offer new types of private health plans. The 106th
Congress enacted legislation to address some issues arising from the BBA changes. The Balanced
Budget Refinement Act of 1999 (BBRA, P.L. 106-113 ) changed the M+C program in an effort make
it easier for Medicare beneficiaries and plans to participate in the program. Further refinements to
the M+C program were included in the Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000 (BIPA, P.L. 106-554 ). The 107th Congress made only minor changes to the
M+C program and was not able to reach consensus on comprehensive modifications. The 108th
Congress is considering major changes to the program.
In 2003, Medicare+Choice plans were available to about 59% of the over 40 million Medicare
beneficiaries, and in March 2003 about 12% of them chose to enroll in one of the 146 (including two
private-fee-for service plans) available Medicare+Choice plans. The rapid growth rate of Medicare
managed care enrollment in the 1990s leveled off with the implementation of the M+C program, and
in fact, there has been a continuous decline in enrollment since 1999 when 17% of beneficiaries were
enrolled in M+C plans.
In order to increase enrollment in Medicare managed care and to allow beneficiaries to better
meet their health care needs, the M+C program offers a diverse assortment of managed care plans.
However, achieving the goals of the M+C program has been difficult, in part because the goal to
control Medicare spending which led to a slowdown in the rate of increase in payments to plans, may
have dampened interest by managed care entities in developing new markets, adding plan options,
and maintaining their current markets.
The Congressional Budget Office (CBO) estimates that in 2003 Medicare will spend $35.9
billion for all Medicare group plans, (including M+C and other private Medicare arrangements, such
as demonstrations). By 2013 the projected spending for Medicare group plans will increase to $46.9
billion.
This report focuses on the recent trends in Medicare managed care, along with an overview of
the M+C program. It will be updated as necessary to reflect significant changes made to the M+C
program. For a more detailed analysis of M+C payments, see CRS Report RL30587,
Medicare+Choice Payments.
