Are the 2004 Payment Increases Helping to Stem Medicare Advantage's Benefit Erosion?

To expand the role of private managed care plans in Medicare, the MMA provided Medicare Advantage plans with significant increases in monthly payment rates, beginning in March 2004. About half the payment increases were used by plans to reduce enrollee premiums and cost sharing and enhance benefits; providers received most of the rest. Although premiums had already begun to decrease in early 2004 for the first time in several years, the payment increases led to further declines. The increases also slowed the trend toward generic-only drug coverage. Overall, average out-of-pocket costs declined to 2003 levels.