Aon Unit Offers Medicare Members Private Fee-for-Service Health Plan.

Sterling Life Insurance Co., a subsidiary of Aon Corp., was approved by the Health Care Financing Administration to offer a Medicare+Choice private fee-for-service plan in 17 states. It is the first such plan for people with Medicare, HCFA said.

Sterling's approved plan, Sterling Option I, became the third member of the Simply Sterling family of products, which includes Medicare Supplement and Medicare Select.

Congress authorized private fee-for-service plans in the Balanced Budget Act of 1997 as an alternative way to provide flexible coverage with affordable premiums to Medicare benefiaries. This type of plan might include contracted providers, and it allows for noncontracted providers if they are paid at or above Medicare allowable amounts.

"While most beneficiaries still receive their health care through original fee-for-service Medicare, we welcome every opportunity to give seniors and people with disabilities alternative health plan choices," said HCFA Administrator Nancy-Ann DeParle. "This plan will serve many rural counties that currently have no Medicare+Choice options."

A private fee-for-service Medicare plan is a private insurance program that charges enrollees a premium and cost-sharing amounts and lets beneficiaries choose the providers they want to see, according to HCFA. In most cases, beneficiaries enrolled in this type of plan pay less to see a doctor than under original fee-for-service Medicare plans.

In Sterling Option I, noncontracted providers give the care. Sterling Life also intends to file applications for plans using contracted providers. These will be known as Sterling Partners.

In addition to all hospitalization and physician services under Medicare Part A and B, the Sterling Option I plan will provide worldwide emergency care and cover more inpatient hospital days. Providers are paid on a fee-for-service basis and are not subject to utilization review 

HCFA approved the plan for Alaska, Idaho, Kentucky, Minnesota, Nebraska, New Mexico, Nevada, Oregon, South Dakota, Tennessee and Utah. It also will be offered in certain counties in Arkansas, Louisiana, Mississippi, Ohio, Texas and West Virginia.

About 6.5 million Medicare beneficiaries out of nearly 40 million aged and disabled Americans have enrolled in Medicare+Choice managed-care plans. Original fee-for-service Medicare is available everywhere.