HealthLeaders-InterStudy, a leading provider of healthcare market intelligence, reports that health plans see private fee-for-service (PFFS) as a key method for growth in the Medicare Advantage space without having to spend money to build a network. According to a new report entitled Medicare Outlook, in response to these opportunities, health plans are offering PFFS products, some aggressively priced to gain a bigger piece of the market.

"These plans are attractive because members are not limited to a network, they are generally cheaper than Medicare supplement plans and prove to be lucrative for insurers," states Roy Moore, market analyst for HealthLeaders- InterStudy and author of the report. "With these plans, seniors can lower their monthly premiums and cap their out-of-pocket expenses on some forms of care."

Humana remains the biggest PFFS player with more than 560,00 enrollees, but other key players are emerging, including Blue Cross and Blue Shield of Michigan. Through a deal with a major employer, the company increased its PFFS enrollment by nearly fivefold from September 2006 to February 2007, giving it more than 150,000 members and the second spot in the total market. At the Michigan Blues plan, seniors could use their insurance card in any other state where they are traveling, an attractive feature for snowbirds that spend the winter months outside the state.

Coventry Health Care also moved into the sector with plans in 43 states and saw all of its gains among seniors who did not want the drug benefit. While the company added 3,500 Medicare Advantage prescription drug members in January and Coventry saw its biggest success with PFFS. Coventry had more than 70,000 new members by January of this year, and based on the strength of a strong 2007 start, the company expects membership to reach 100,000 by year's end, placing it among the top PFFS plans nationally.

Aetna hopes its PFFS product will be used to acquire members of employer or union-based retiree groups. Aetna, like many other health plans, likes this product because it can transition seniors into managed care. PFFS plans and their non-network restrictions appeal to corporations with retirees spread out over the country. Creating an HMO network for these retirees is more difficult because they are not concentrated in a single area. Traditionally, companies and their retirees turned to indemnity-based products like Medicare supplement products, but there is a gravitational shift toward managed care products like HMO, PPO and PFFS.

About Medicare Outlook

Medicare Outlook is a comprehensive report covering the dynamic managed care segment of Medicare. From analysis on the latest Medicare initiatives to organized Medicare enrollment data, Medicare Outlook offers organizations the information necessary in understanding developments from within the Medicare market.

For additional insight into current trends and developments within the Medicare managed care segment, visit www.healthleaders-interstudy.com to download an audio interview with Roy Moore, HealthLeaders-InterStudy's Medicare market analyst.

About HealthLeaders-InterStudy

HealthLeaders-InterStudy is the authoritative source for managed care data, analysis, and news. For more information, please visit www.HealthLeaders-InterStudy.com.

All company, brand, or product names contained in this document may be trademarks or registered trademarks of their respective holders.

  For more information, contact:    Kelly Morphy   HealthLeaders-InterStudy   615-369-4818   kmorphy@healthleaders-interstudy.com 

SOURCE: HealthLeaders-InterStudy

CONTACT: Kelly Morphy of HealthLeaders-InterStudy, +1-615-369-4818,
kmorphy@healthleaders-interstudy.com

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