Higher Medicare+Choice Payments Have ‘Little Effect’
The General Accounting Office reported yesterday that increased reimbursements for health plans that participate in Medicare+Choice have not stopped the withdrawal of HMOs from the program, the New York Times reports. In each of the past two years, Congress has increased Medicare+Choice reimbursements for HMOs to "reverse their exodus" from the program, but in a report to Congress, the GAO found that increased reimbursements have had "little effect on the number of [Medicare] beneficiaries with access" to managed care plans. The GAO also found that many health plans used the additional funds to increase reimbursements to hospitals and health care providers, but "relatively few" have improved benefits for seniors. Congress is considering proposals to increase reimbursements to health plans in Medicare+Choice again this year. According to Susan Pisano, a spokesperson for the American Association of Health Plans, past increases in Medicare+Choice reimbursements have "not been enough to offset cuts made" in the 1997 Balanced Budget Act. "Medical inflation has outstripped the increases in Medicare reimbursement," Pisano said, adding, "Costs are rising 8% to 12% a year. Some hospitals are demanding increases of 30% in the payments they receive from health plans. But for many plans, Medicare reimbursement has been rising only 2% or 3% a year." Democrats, however, dismissed the "arguments" as "unpersuasive." Rep. John Dingell (D-Mich.) said, "Congress continues to pour money into the coffers of Medicare HMOs in hopes of providing better care to America's seniors. But the HMOs keep stranding hundreds of thousands of beneficiaries annually by either leaving the program or reducing benefits. It is foolish even to consider throwing more money at this failed system." About 5.6 million seniors, or 14% of the 40 million Medicare beneficiaries, participate in Medicare+Choice. A number of HMOs plan to withdraw from the program on Jan. 1, which will affect about 536,000 seniors nationwide (Pear, New York Times, 12/4).