The others will be able to get benefits through traditional Medicare. Marilyn Moon, a health economist at the Urban Institute, a Washington-based think tank, said the Balanced Budget Act that opened Medicare to competition also kept some insurers from entering the market by slowing the annual growth of Medicare reimbursements. Congress last year boosted reimbursements in rural areas where choices are limited to encourage private insurers to enter those markets. Sterling's strategy is to capture those bonus payments and stay out of highly competitive markets, said Debbie Ahl, chief operating officer for Olympic Health Management Service, the administrative arm of Sterling. Many seniors who use traditional Medicare buy supplemental polices to enhance benefits.
Sterling offers lower co-payments for hospital stays and a nurse advice line.
Like traditional Medicare, Sterling's plan does not include prescription drug coverage. The benefit is the top draw of many Medicare HMOs, but also is among their biggest headaches because of exploding drug prices. Senior advocates say offering a drug benefit would make Sterling more popular. The plan had only about 100 enrollees on Sept. 1, though company officials expect more when they start a marketing initiative. Congress is considering paying for a drug benefit for seniors, and Ahl said Sterling is waiting to see what happens before taking action on its own.