Flexible MA plans account for half of new growth

October 1, 2006

Washington, D.C.-More seniors are enrolling in Medicare Advantage plans, particularly in the expanding number of more flexible "private fee-for-service" (PFFS) plans.

WASHINGTON, D.C.-More seniors are enrolling in Medicare Advantage plans, particularly in the expanding number of more flexible "private fee-for-service" (PFFS) plans. The Centers for Medicare and Medicaid Services (CMS) reported a 20% rise in MA plan members for 2006; about half of the growth is in PFFS plans, and the other half in HMOs and PPOs; local HMOs continue to dominate the MA program, with 5.4 million of nearly 7.5 million total MA enrollees.

PFFS plans are attractive to seniors because they don't limit beneficiaries to providers in a certain network. This also has made them more expensive than HMOs or PPOs, but now they can receive more attractive rates, particularly for serving Medicare patients in rural areas. PFFS plans thus are growing most noticeably in rural and other areas that previously did not attract MA plans because of difficulties contracting with the smaller number of physicians in these markets who often are reluctant to join MCO networks.

PFFS plans now serve more than 800,000 seniors, more than half of them in plans sponsored by Humana, according to an analysis by Avalere Health. This represents a jump from about 220,000 PFFS enrollees last December and just 20,000 three years ago. While Humana PFFS covers Medicare Part D drug benefits, seniors in such plans sponsored by UHC-Pacificare and WellPoint obtain drug benefits from separate Part D plans.