WASHINGTON — The Obama administration is putting new curbs on private insurance plans that are popular with seniors in Medicare but have been criticized for marketing abuses and high costs to the government.
Administration officials said the changes include winnowing the number of versions of a plan that insurers can offer, discouraging insurers from shifting costs to patients with chronic diseases and banning an occasional practice of charging patients more for brand-name drugs.
The officials spoke on condition of anonymity because the information has not been publicly released. A formal announcement was planned later today.
The new policies reflect an administration effort to put its stamp on private plans in Medicare, which flourished under Republicans but are seen by some Democrats as undermining the traditional program. The plans are offered by major insurers such as United Healthcare and Humana.
About 10 million seniors get comprehensive medical coverage through such plans, and another 17 million are signed up in private drug plans. Every year, they get the opportunity to sign up or change plans during an open enrollment period.
In a separate move, the administration has proposed payment cuts of 3.75 percent overall to private medical plans that serve seniors. Insurers claim the cut could be as high as 5 percent for some plans, and they’ll have to pass on the cost through higher premiums or fewer benefits.
The changes to be announced today are in an annual “call letter,” a contracting document that sets the rules for insurers wanting to offer coverage in 2010.
Officials said the reduction in the number of Medicare plans is meant to cut down confusion, not reduce choice. Most insurers offer several variations on a basic plan. Nearly 1,400 plans out of some 7,000 have fewer than 10 members, officials said. Medicare will closely scrutinize the private plans’ bids for 2010 to eliminate offerings that only tweak a basic plan.
Medicare also will take a close look at pricing policies that try to shift costs to beneficiaries with chronic illnesses.
Insurers are allowed considerable leeway to design their Medicare coverages. Some, for example, offer plans that charge much higher copayments for a nursing home stay than does the traditional Medicare program. Officials said that will be strongly discouraged because it can discriminate against people with cancer and other chronic conditions.
Finally, Medicare will ban a practice that some prescription drug plans use to charge seniors more for brand-name drugs. In addition to a higher copayment for the brand medication, these plans also tack on the difference between the cost of the brand drug and a generic version.
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