Insurers to Get Medicare Increase

PacifiCare Health Systems Inc., the biggest manager of Medicare health plans, and other insurers will get about a 4.8% payment increase from the program in 2006, the Centers for Medicare and Medicaid Services said Monday.

Managed-care plans that enroll some of the 41 million people in Medicare, the U.S. government’s health insurance program for the elderly and disabled, will get the increased payments, the Baltimore-based agency said.

“This continues the work done by Congress in the Medicare Modernization Act,” said Mohit Ghose, a spokesman for the America’s Health Insurance Plans trade group.

U.S. healthcare spending increased 7.6% in 2003, according to the most recent numbers available from the center. The 2003 Medicare act gave managed-care plans an average increase of at least 6.6% this year. Insurers, which were getting average annual increases of 3.2%, dropped more than 2 million Medicare patients from 1999 to 2003, saying government payments didn’t cover costs.

The U.S. will rely on insurers such as Cypress-based PacifiCare and pharmacy benefit managers such as Medco Health Solutions Inc. to manage expanded prescription drug coverage that takes effect Jan. 1. Health plans that currently cover Medicare patients will receive additional reimbursement for offering prescription drug coverage next year, the government said.

The Medicare law changes are expected to cost more than $534 billion over 10 years, according to the Department of Health and Human Services.