With its revision of the draft 2010 Call Letter setting, contract terms for Medicare health and drug plans, the Obama administration has proposed new criteria for approving the benefit packages of Medicare private health plans. In the draft 2010 Call Letter issued 23 FEB, the Centers for Medicare & Medicaid Services (CMS) said it wanted to eliminate plan offerings that had very low enrollment or that had benefit packages that were very similar to other plans offered by the same company. CMS also set a higher bar for approving benefit packages offered by Medicare private health plans. Plans that provided a comprehensive out-of-pocket limit on medical services of $3,400 or less and did not charge more than Original Medicare for kidney dialysis, psychiatric hospitalization, chemotherapy and other Part B drugs, or skilled nursing facility care will generally not be considered to have a benefit design that discriminates against less healthy, higher-cost enrollees, CMS said. To be considered comprehensive, the plan's out-of-pocket limit must not exclude any services covered under Medicare's inpatient (Part A) and outpatient (Part B) benefit.
     Consumer advocates, including the Medicare Rights Center, applauded the move toward higher standards for approving benefit designs offered by Medicare private health plans. However, advocates argued that CMS should require plans to set a lower annual out-of-pocket limit. Only 15% of people with Medicare have out-of-pocket spending greater than $3,400. An out-of-pocket limit set at $2,250 would provide greater protection, since it is roughly pegged at 10% of the median annual income of people with Medicare (half earn more, half earn less). Advocates also argued that Medicare private health plans should not be allowed to charge more than Original Medicare for home health, durable medical equipment or hospital care.