On January 16, 2004, the Centers for Medicare and Medicaid Services ("CMS") announced significant increases in federal payment rates for Medicare Advantage ("MA") health plans (the successors to Medicare+Choice ("M+C") plans). The increased payments are required by the Medicare Prescription Drug, Improvement and Modernization Act ("MMA"), which created the Medicare Advantage program. The MA program replaces and expands upon the M+C program. MA plans must use the increased payments to reduce premiums and copays, enhance benefits, stabilize or expand their provider networks, and offset premium increases or reduced benefits. The amount of the payment increases varies by county, but the average increase will be approximately 10.6 percent for counties where MA plans are currently available, which includes a 3.2 percent increase that was scheduled for 2004 prior to enactment of the MMA. The new payment rates are available at

http://www.cms.hhs.gov/healthplans/rates/

Changes in MA plans' benefits and premiums will be available at

www.medicare.gov

on March 4 and plan enrollees should receive notices from their plans regarding the changes by March 8. The MMA also allows plans that planned to leave the M+C program or reduce services to remain in the plan or expand services. These plans must submit new proposals to CMS by January 30, 2004. All managed care organizations that have contracts with CMS for 2004 must also revise their Adjusted Community Rate Proposals ("ACRP") and submit the revised ACRPs to CMS by this same date.

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