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CMS To Test New Medicare MSA Model

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The Centers for Medicare & Medicaid Services will be trying to adding more flexible medical savings accounts to the Medicare program in 2007.

The CMS is asking for proposals from companies that want to offer Medicare beneficiaries high-deductible plans that would give beneficiaries a chance to keep unused account assets at the end of the year.

The demonstration program would serve individual Medicare beneficiaries and retiree plans sponsored by employers that already offer health savings account plans to active employees, CMS officials say.

Medicare already has a small MSA program, and Medicare’s total payment to the new MSA plans will be the same as under current rules for Medicare Advantage MSA plans, officials say.

But the new MSA plans will be more flexible and more like HSAs, and that should increase their appeal to beneficiaries, officials say.

The new MSAs would offer a limit on an enrollee’s out-of-pocket expenditures, coverage for preventive services, and a reduction in out-of-pocket costs for users of in-network services, officials say.

The demonstration project will start in 2007, but the CMS expects many companies will have to wait until 2008 until they are ready with a Medicare MSA plan, officials say.

The National Association of Health Underwriters, Arlington, Va., has put out a statement welcoming the new program.

“CMS proposes a sensible solution that would implement proven market-driven initiatives to promote competition and more choices for seniors making health care decisions,” NAHU Chief Executive Janet Trautwein says. “When patients are paying more attention to the cost of health care and demanding value for their dollars, total health care spending will decline.”