HMOs Direct Giveback Funds to Providers, Not Enrollees
Managed care organizations participating in Medicare+Choice have allocated most of the funds given to them under the Medicare "givebacks" legislation to increasing provider reimbursements, not to increasing benefits or reducing enrollee premiums as Congress intended, the New York Times reports. Under one provision of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (HR 5661), passed by Congress in December as part of the omnibus spending bill, Medicare HMOs will receive $11 billion over the next five years in additional funding. The legislation was intended to slow or stop the recent exodus of HMOs from Medicare+Choice; the last three years have seen "scores" of insurers leave the market, and on Jan. 1, 934,000 of the 6.3 million Medicare+Choice enrollees were dropped as their health plans left the program. But with Jan. 18 the deadline for HMOs to inform the government how they would allocate the first installment of giveback funding, federal officials said yesterday that "just five health plans had expressed an interest" in returning to Medicare+Choice, while "few plans" have said they will increase benefits. Instead, industry representatives and health plan officials said the additional money would be used to help keep providers in the program. Karen Ignagni, president of the American Association of Health Plans, said, "The foundations of this program were crumbling, so health plans had to shore up their networks of providers. If you don't have providers, you don't have a managed care program for Medicare."
According to Rep. Pete Stark (D-Calif.), "one of the Democrats' leading experts on health care legislation," boosting provider payments was not what Congress intended when it passed the legislation. "We were flimflammed by the HMOs. We were induced to support this legislation after being told that the extra money would be used for extra benefits or lower co-payments," Stark said. When the House passed the givebacks legislation in October, it assigned only four purposes for which the extra money could be used: to lower Medicare beneficiaries' premiums, to lower co-payments, to increase benefits or to "prevent the reduction of benefits in future years." HMOs, however, lobbied for provider reimbursements to be added to this list, and Congress later "revised the legislation" to include this request in the final version. The Times reports that to the "dismay" of many beneficiares who entered the Medicare+Choice program in order to receive prescription drug coverage benefits not offered by traditional fee-for-service Medicare, most Medicare HMOs "increased co-payments or imposed new limits on such benefits this year" (Pear, New York Times, 1/26).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.