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Medigap Plans in Illinois to Benefit From Medicare Advantage Reimbursement Cuts
Date:7/28/2009

NASHVILLE, Tenn., July 28 /PRNewswire/ -- HealthLeaders-InterStudy, a leading provider of managed care market intelligence, reports that planned cuts to Medicare Advantage reimbursement will benefit organizations offering Medicare supplement plans in Illinois. According to the recent Illinois Health Plan Analysis, the shift from Medicare Advantage to Medicare supplement plans, also known as Medigap plans, will likely benefit Blue Cross Blue Shield of Illinois, the state's top Medigap insurer.

Medicare Advantage plans have traditionally not been strong in the Illinois market because of the state's generous retirement benefit culture. In June 2009, the penetration rate for Medicare Advantage in Illinois was 10 percent, well below the national average of 24 percent. However, in recent years, companies such as HealthSpring entered the state with Medicare Advantage plans that offered many of the same benefits as Medicare supplement policies at a lower price, prompting growth in the state's Medicare Advantage market. However, with reimbursement cuts planned for Medicare Advantage plans in 2010, recent growth in Illinois may be stalled.

"Traditionally, Illinois has not had a high Medicare Advantage reimbursement rate, and now planned cuts will mean reimbursement for Medicare Advantage will be reduced even further. With decreased federal funding, Medicare Advantage plans in Illinois will need to reduce benefits or increase premiums," said Paula Wade, assistant director, Health Plan Analysis. "Current Medicare Advantage members may shift to Medicare supplement policies, which will be attractive because of their stability and cost relative to Medicare Advantage plans. As the largest Medicare supplement policy writer in the state, Blue Cross Blue Shield of Illinois stands to benefit from this shift, particularly because it offers guaranteed issue at all ages."

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SOURCE HealthLeaders-InterStudy
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