A. Background - Medicare Advantage Program
The Balanced Budget Act of 1997 (BBA) created a new Part C of the Medicare program, known as Medicare+Choice (M+C), that significantly expanded the health care options available to Medicare beneficiaries. Beginning 01/01/99, eligible individuals could begin to receive Medicare benefits through enrollment in one of an array of private health plan choices beyond the Original Medicare Program or the plans that were available through Managed Care Organizations under section 1876 of the Social Security Act (referred to as 1876 cost plans).
The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) revised Medicare Part C, including a program name change from Medicare+Choice to Medicare Advantage (MA), and added a voluntary outpatient prescription drug benefit under a new “Part D” of Medicare. The MA program retains many provisions of the M+C program while updating and improving choice of plans for beneficiaries and restructuring how plans are paid. Under the MMA, beneficiaries will have additional choices of plan options -- regional PPO plans and specialized MA plans for special needs individuals (Special Needs Plans or SNPs).
MA organizations may, at their discretion and with CMS approval, offer plans that include a Part B premium reduction. This reduction is known as Medicare Advantage Reduction (MARD). The amount of the reduction may vary among plans.
The Centers for Medicare and Medicaid Services (CMS) contracts with private plans to provide the drug benefit. Individuals need to enroll in a stand-alone Prescription Drug Plan (PDP) or a Medicare Advantage Plan that includes a drug benefit (MA-PD) in order to receive this Medicare benefit, which began on January 1, 2006.
As of January 1, 2006, Medicaid no longer covers pharmacy benefits for individuals eligible for both Medicare and Medicaid (also referred to as “dual eligibles” or “duals”). Depending on their income and resources, individuals may qualify for extra help (the “low income subsidy”) with their Medicare prescription drug costs– premiums, deductibles, and copayments.