WASHINGTON, D.C.-Medicare Advantage (MA) plans can reduce out-of-pocket costs for most beneficiaries by about $100 a month, according to the Centers for Medicare and Medicaid Services (CMS). CMS Administrator Dr. Mark McClellan explained that the savings come from additional coverage, benefits and support by MA plans compared with the traditional Medicare fee-for-service program.

Dr. McClellan also reported that such savings will be available for more Medicare beneficiaries in coming months. CMS has received more than 125 new MA plan applications this year, including 50 plans completely new to the program and about 80 new PPOs. In addition, current MA plans have filed more than 70 proposals to expand existing service areas.

These numbers are expected to grow as CMS continues to provide financial support for the MA program. In April, Medicare announced that reimbursement rates for MA plans will increase by 4.8% in 2006, continuing the recent growth in payments to Medicare managed care plans. Between 1999 and 2003, MA plans received an average rate increase of only 3.2%, not enough to keep up with healthcare inflation, and many plans dropped out. But the Medicare Modernization Act turned things around, leading to a jump in payments by more than 10% in 2004 and over 6% this year.