Medicare Compliance & Reimbursement

In addition to the new MSAs, Medicare benes can now have access to other HSA-like plans.

Medicare is trying to keep up with the increasing consumer demand for alternative health insurance products. And the Centers for Medicare & Medicaid Services (CMS) is using Medicare Advantage (MA) programs to take more flexible coverage options a step further.

CMS is kicking off a new demonstration program that will allow MA plans to offer health savings account (HSA)-type plans to Medicare beneficiaries. "The increased interest in HSAs among both individuals and employers has generated market interest for vendors," CMS said in its July 10 announcement.

The demonstration will add HSA-like coverage choices to CMS' new Medical Savings Account (MSA) benefit, which is already becoming available to Medicare benes. Medicare pays for high-deductible health plans for MSA enrollees and deposits money into the enrollees' accounts at the beginning of the year, which is tax free, CMS explains.

"Along with HMOs, PPOs and private fee-for-service plans, Medicare is aiming to provide a full range of coverage options so that our beneficiaries can get the coverage they prefer at the lowest possible cost," Health and Human Services secretary Mike Leavitt said in a July 10 statement.

"Account-based plans in Medicare would be attractive to beneficiaries who want more control over their own health care spending, with protection from catastrophic health care expenses at a lower premium cost, including beneficiaries who were enrolled in HSA plans prior to becoming eligible for Medicare," CMS notes.

The demonstration includes HSA-like offerings for both individual Medicare benes and "employers who are now offering HSA plans to their pre-Medicare employees and retirees," the agency adds.

CMS Makes Demo Appealing For You, Too

Payment for these plans will be the same as the MSA plans, but CMS hopes that unique benefit designs will make them attractive to health plans and Medicare benes alike.

"Because health care organizations will spend some time developing appropriate product designs and setting up their business infrastructure, we expect participation in the demonstration to increase between 2007 and 2008," says CMS administrator Mark McClellan. Participation should actually snowball as time goes on, he adds, as more HSA benes enroll in Medicare and want to keep their HSA plan.

In fact, CMS plans to launch an even "wider variety of MSA products in 2007 or 2008 that more closely resemble HSAs," CMS says.

To entice insurers, CMS has set the MSA demonstration's parameters so that they "provide opportunities for plans to offer competitive, marketable MSAs to beneficiaries. As has been the case for organizations that have been considering offering a Medicare Advantage MSA product under the current program authority in 2007, CMS will be proactive in providing technical assistance to interested applicants designing an MSA demonstration," the agency explains.

Some limitations to note if you're thinking about involving your health plan in the demonstration include:

• CMS will require you to furnish their enrollees with cost and quality information on health care services;

• You must provide enrollees with appropriate tools and assistance in using the quality and cost information to make health care decisions;

• CMS can't allow you to offer an MA prescription drug plan (PDP) as part of the demonstration, but you would be able to offer a stand-alone PDP to benes in the demonstration; and

• Employer-group only plans can offer an employer-group only stand-alone PDP product.

CMS wants all applications to participate in the demonstration by July 21 and bids by Aug. 10. You can get the application form online at www.cms.hhs.gov/MedicareAdvantageApps/02_Final%202007%20Applications.asp.