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Health Plans - General Information

This page contains information for current and future contracting Medicare Advantage (MA) organizations, other Medicare managed care health plans, and additional parties interested in the operational and regulatory aspects of the MA program.

The Balanced Budget Act of 1997 (BBA) established a new Part C of the Medicare program, known then as the Medicare+Choice (M+C) program, effective January 1999. As part of the M+C program, the BBA authorized CMS to contract with public or private organizations to offer a variety of health plan options for beneficiaries, including coordinated care plans (such as health maintenance organizations (HMOs), provider sponsored associations (PSOs), and preferred provider organizations (PPOs)), Medicare Medical Savings Account (MSA) plans, private-fee-for-service (PFFS) plans, and Religious Fraternal Benefit (RFB) plans. These health plans provide all Medicare Parts A and B benefits, and most offer additional benefits beyond those covered under the Original Medicare program.

The M+C program in Part C of Medicare was renamed the Medicare Advantage (MA) Program under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), which was enacted in December 2003. The MMA updated and improved the choice of plans for beneficiaries under Part C, and changed the way benefits are established and payments are made. Under the MMA, beneficiaries may choose from additional plan options, including regional PPO (RPPO) plans and special needs plans (SNPs). The MMA further established the Medicare prescription drug benefit (Part D) program, and amended the Part C program to allow (and, for organizations offering coordinated care plans, require) most MA plans to offer prescription drug coverage.

Other Medicare health plans include section 1876 cost contract plans and section 1833 health care prepayment plans (HCPP plans). Cost contract plans are paid based on the reasonable costs incurred by delivering Medicare-covered services to plan members. Enrollees in these plans may use the cost plan's network of providers or receive their health care services through Original Medicare. Section 1833 HCPPs are generally employer-or union-sponsored managed care plans that provide for Medicare Part B benefits on a prepayment basis. Medicare reimburses HCPP plans for Part B services only and, like section 1876 cost plans, payment is based on reasonable costs.

As CMS gains continued experience with the MA program and as new legislation changes MA program requirements, we periodically revise our regulations at Part 422 of Chapter 42 of the Code of Federal Regulations to clarify various program participation requirements; strengthen beneficiary protections; and strengthen our ability to select stronger applicants for participation in our program and to remove consistently poor performers. Updated information relevant to the MA program can be found by clicking the “What's New” link on the left side of this page.