MEDICARE HMO PULL-OUTs: GAO Study Contradicts Industry
A General Accounting Office report released yesterday "undercuts" claims by the managed care industry that reduced government reimbursements led many HMOs to drop out of certain Medicare markets last year. Rather, the report said payment changes were only one of several factors that may have contributed to HMO withdrawals, including "low enrollment and high levels of competition." The report concluded that "plan withdrawals cannot be traced to a single cause" and "a portion of the pullouts may have been the result of plans deciding they were too weak to effectively compete in certain areas."
American Association of Health Plans President Karen Ignagni said the report "didn't fully reflect the impact of the Balanced Budget Act and the regulations implementing it and the forces that that put in motion" (McGinley, Wall Street Journal, 4/28). She said, "There is no doubt that the disruption in coverage for 450,000 Medicare beneficiaries in Medicare+Choice is due to the unintended consequences associated with enactment and regulatory implementation of the Balanced Budget Act of 1997. ... This is why we have called on Congress and the administration to make the mid-course corrections necessary to ensure that beneficiaries do not face further disruptions" (AAHP release, 4/27). Health Insurance Association of America President Chip Kahn added that the GAO's "conclusion vastly understates the cumulative impact of rate constraints and additional red tape on Medicare HMOs. The GAO report is seriously deficient because it fails to warn Congress that, on its present course, the future of the Medicare+Choice program is in jeopardy" (HIAA release, 4/27). Senate Special Committee on Aging Chair Chuck Grassley (R-IA), one of the report's requestors, said, "The turnover of Medicare managed care plans doesn't surprise me. ... We knew that managed care plans, as private businesses, would get in and out of Medicare as they saw fit. We can try to entice their involvement, but we can't compel it. Regardless of how many plans choose to participate in Medicare, Congress is obligated to make sure older Americans have complete information about their health care options. Plan turnover should not catch any Medicare beneficiary off guard" (committee release, 4/27). The GAO's Web site (www.gao.gov) says the full report should be available soon both electronically and in print.