HHS Grants Medicare+Choice HMOs Deadline Extension

The Bush administration announced plans Tuesday to allow managed care plans 10 additional weeks to notify the government whether they will withdraw from Medicare+Choice next year, the Wall Street Journal reports. According to HHS officials, the additional time will allow Medicare managed care plans to collect cost data and other information before deciding whether to leave the program. HHS also said that MCOs will not have to file data on outpatient physician and hospital visits, a requirement that health plans and doctors have called "burdensome" (Wall Street Journal, 5/30). Bush administration officials hope that the extended deadline will "persuade wavering insurers to stay" in Medicare, but USA Today reports that the move might "swing some plans the other way, particularly if they find expenses outpacing forecasts." Insurers have said that Medicare+Choice "doesn't pay enough in many areas" and have called the program "too complex" (Appleby, USA Today, 5/30). Last year, 118 MCOs announced plans to withdraw from Medicare or to exit unprofitable markets, maintaining that they "couldn't afford to stay." About 934,000 Medicare beneficiaries were affected by the HMOs' withdrawal, according to HCFA. HCFA Administrator Thomas Scully said that next year, as many as 3% of Medicare MCOs could "drop out" of the program. "Those two regulatory fixes and more money are the things the health plans have been asking for," he said, adding that beneficiaries "won't be hurt" by the extension.

However, the Journal reports that the deadline shift "leaves less time for beneficiaries to find new coverage" if plans do drop out (Wall Street Journal, 5/30). Beneficiaries enrolled in plans that intend to exit Medicare+Choice will receive notices of the withdrawal by mail in November, the same time as last year, but many usually hear the news earlier through media reports or "local senior support agencies." The administration's changes will push the release date for that news from July to September (USA Today, 5/30). According to Families USA Executive Director Ron Pollack, the administration's changes could leave some Medicare beneficiaries "high and dry" and "scrambling" to replace prescription drug coverage that some Medicare managed care plans provide, but traditional Medicare does not. But insurers and health plans praised the rolled-back deadline. Karen Ignagni, president of the American Association of Health Plans, called the move "a good first step," but added that "there are still barriers to HMOs remaining" in Medicare+Choice (Wall Street Journal, 5/30). Saying the new deadline is a "step in the right direction," Health Insurance Association of America President Chip Kahn added, "Extending the deadline allows [Medicare+Choice] plans to better assess the impact of health care cost increases, and ... their ability to continue offering seniors affordable Medicare coverage" (HIAA release, 5/30).

USA Today reports that the Bush administration hopes to sustain Medicare+Choice as an "example that the private sector can provide coverage" to Medicare beneficiaries, an important part of the administration's Medicare reform proposals. "This is an important signal the administration is sending. This is the beginning of fulfilling a promise to making the program administratively workable," Ignagni said (USA Today, 5/30).