Less than 15 percent of Medicare beneficiaries are enrolled in Medicare managed care programs, previously known as the Medicare+Choice plan, but now referred to as Medicare Advantage. As part of the Medicare Reform Package [that resulted in the enactment of the Medicare Prescription Drug Improvement and Modernization Act of 2003 (P.L. 108-173)], Congress increased payments to Medicare HMOs for 2004. In 2006, seniors became eligible for a new Medicare option: PPOs. This was expected to meet the demand of “baby-boomers,” the first of whom were entering their 60s at that time. Because approximately 80 percent of individuals with private insurance had PPO plans, the transition to Medicare PPO would be a smoother transition.
Traditional Medicare enrollees often need to understand and deal with three different plans: basic Medicare, “medigap” supplemental insurance, and the new Part D prescription drug plan. However, Medicare Advantage enrollees may reduce this burden by combining regular health care and prescription drugs, as well as limiting ou-of-pocket expenses for copays and deductibles.