Many Medicare HMOs to get improved benefits, premiums

Question: I read that the federal government will soon pay more to Medicare HMOs. What does that mean to consumers?

Answer: According to a survey by the AAHP-HIAA, a group representing health insurance providers, many HMOs will lower enrollees' monthly premiums and reduce co-pays and deductibles. Six in 10 plans have said they will increase benefits, such as prescription-drug coverage, and many will give seniors broader access to doctors and hospitals.

This year Medicare increased the per-beneficiary rate for managed-care plans by 10.6 percent, or five times the annual percentage increase in the past few years. The plans have flexibility in how they employ the extra money, as long as it's used to help enrollees. Medicare also has a new name for its managed-care program. Formerly known as Medicare plus Choice, it's now Medicare Advantage.

HMOs may spend the extra funds to improve benefits — PacifiCare's Secure Horizons plan says it will boost brand-name drug coverage — and maintain or expand their network of doctors and health-care providers.

The funds can also be used to build up HMOs' financial reserves, providing the money is later used to offset future premium increases or benefit cuts. Two are planning to lower premiums or co-pays for their Medicare managed-care members as a result of the increased payments.

Currently, 4.6 million of Medicare's 41 million beneficiaries are enrolled in Medicare HMOs. Enrollment in managed-care plans peaked in 1999 at 6.3 million. But in 1997, when the government began to cut back on the extra subsidies it was paying plans, the plans began cutting benefits and dropping out. The recently passed Medicare Act of 2003 aims to beef up the number of private managed-care plans in Medicare.

If you are enrolled in a Medicare HMO, you should receive a letter describing any changes the plan is making in 2004, including new benefits or services and cuts in premiums or co-payments.

You can find benefits and premiums on all Medicare HMOs at www.medicare.gov.

Question: How much does nursing-home care cost?

Answer: In 2003, a year in a nursing home cost $57,700, according to a GE Financial survey of more than 2,000 homes across the country. The average annual cost ranged from a low of $35,900 in Louisiana to $166,700 in Alaska.

If you're looking for a nursing home, go to www.medicare.gov to make preliminary judgments about quality and staffing. From the home page, click on "Nursing Home Compare." When you have a list of prospects, visit each home in person.