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.