On March 4, President George W. Bush outlined a Medicare reform "framework" designed to provide prescription drug coverage for senior citizens while encouraging Medicare beneficiaries to enroll in private insurance plans. The President's plan has three major components. First, for those beneficiaries who choose to remain in the traditional fee-for-service Medicare program, the President proposes making available a prescription drug discount card; providing coverage against catastrophic drug expenses (no deductible was specified); and, for low-income seniors, providing $600 per year to help pay for prescription drugs. Second, the President's plan would create an "Enhanced Medicare" program, under which private plans would bid to become Medicare preferred provider organizations (PPOs) for different regions of the country. The PPOs would be required to provide prescription drug benefits; preventive benefits, with no cost-sharing; and catastrophic coverage for all medical expenses. PPOs would be required to serve an entire region. The region suggested for New York would include all of New York State and New Jersey. Beneficiaries would have a choice of PPOs. If they chose the average-cost PPO in their region, they would pay the same premium they pay currently. If they chose higher-cost plans, they would have to pay more; and if they chose lower-cost plans, they could share in the savings. Third, the President proposes maintaining the current Medicare+Choice program but, rather than setting payments to health maintenance organizations based on county-specific Medicare spending, plans would be required to bid. While the President did not propose cutting Medicare provider rates to help pay for his plan (which he estimates would cost $400 billion over 10 years), he did signal in his budget proposal that the Administration would work with Congress to implement recommendations put forth by the Medicare Payment Advisory Commission (MedPAC). Last month, MedPAC proposed Medicare market basket update cuts for inpatient and outpatient hospital services and update freezes for skilled nursing facilities and home health agencies.