Medicare Part C was created by the Balanced Budget Act of 1997. It was originally known as Medicare+Choice (M+C), and it was designed to: (i) offer coverage beyond that provided under Medicare Parts A and B; and (ii) at a lower cost to the Medicare beneficiary. This was to be accomplished through contracts between the Medicare program (CMS) and public or private organizations offering a range of health plan options, including: (i) coordinated care plans (i.e., health maintenance organizations, provider sponsored organizations and preferred provider organizations); (ii) medical savings account plans; (iii) private fee-for-service plans; and (iv) religious fraternal benefit society plans.
The M+C Program had numerous problems, including a severe shortage of plan offerings in rural areas, geographic disparities in payment, and a crippling exodus of plans from the M+C Program altogether. As a result, the 2003 MMA legislation replaced the M+C Program with the Medicare Advantage (MA) Program. The MA Program was designed to address the problems encountered under the old M+C Program and to implement the new Medicare Part D benefit. CMS issued proposed regulations to implement the MA Program on August 3, 2004 (69 Fed. Reg. 46866). Final regulations were published on January 28, 2005 (70 Fed. Reg. 4588) and were effective as of March 22, 2005.
An organization that contracts with CMS under the MA Program is an MA Organization (MA Organization). A product offered by an MA Organization pursuant to an MA contract between the MA Organization and CMS is an MA Plan (MA Plan).
The basic categories of plans that may be offered under the MA Program are the same as those available under the M+C Program:
(1) coordinated care plans – there are five types of coordinated care plans (as discussed below);
(2) private fee for service plans;
(3) medical savings account plans; and
(4) religious fraternal benefit plans.
To be eligible to enroll in an MA Plan, a beneficiary must be eligible for Part A, enrolled in Part B, and not have been medically determined to have end-stage renal disease (ESRD), unless that beneficiary with ESRD seeks to enroll in a Special Needs Plan that has opted to enroll ESRD individuals. Beneficiaries must also reside within the plan's service area or, if the beneficiary has been enrolled in an MA local plan but moves out of the plan's service area, within a continuation area in which the plan has made arrangements to continue services to enrollees who move out of the plan's service area. 42 C.F.R. § 422.52.
Excerpt from James F. Flynn, History and Overview of Medicare Part C, Fundamentals of Health Law (American Health Lawyers Association Nov. 2011).