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MEDICARE MANAGED CARE
The number of beneficiaries with drug coverage through Medicare managed care has risen to 17 percent. Most
Medicare managed care plans offer prescription drugs. Drug coverage is one of the major attractions for
beneficiaries to enroll in these plans.
Drug coverage under Medicare+Choice is unstable. Managed care plans are not required to offer a drug
benefit, but can do so with any excess Medicare payments or by charging a premium. This results in wide variation
across areas, since payments vary by area, and over time.
The value of Medicare managed care drug benefits is declining. Nearly three-fifths of plans are reporting
that they will cap prescription drug benefits below $1,000 in the year 2000. The proportion of plans with $500 or
lower benefit caps will increase by over 50 percent between 1998 and 2000. This is part of a troubling trend of
plans to severely limit benefits through low caps.
Plans dropping out of Medicare limit access to drugs. Nearly 80,000 Medicare beneficiaries will lose access
to Medicare managed care next year as plans withdraw from particular areas or Medicare altogether.
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