MEDICARE HMOs: GAO SAYS GOVERNMENT PAYS TOO MUCH

      "In a stinging critique of government spending for [HMOs],
 the General Accounting Office" (GAO) said yesterday that Medicare
 HMOs in California were paid $1 billion more than they "should
 have" been paid.  LOS ANGELES TIMES reports that the GAO report
 called for an "immediate change" to the way in which Medicare HMO
 reimbursements are calculated, "a step it said could recoup $276
 million of the estimated $1 billion loss in the state."  The
 report said that during 1995, "the $2.1 billion that Medicare
 paid to HMOs in L.A. County was $429 million too much."  The GAO
 selected California for its study because 36% of the nation's
 Medicare beneficiaries are enrolled in HMOs in that state.
      DISAGREEMENT:  "'We challenge' the report," said Craig
 Schub, senior vice-president of PacifiCare Health System, the
 state's largest HMO.  TIMES reports that the managed care
 industry denounced the report saying it provides good care
 without 'cherry picking' members from among healthy senior
 citizens."  Susan Pisano, spokesperson for the American
 Association of Health Plans, said that there "is no difference in
 the health status of people who join HMOs compared with those who
 remain in the regular Medicare program."  TIMES reports that "the
 report is likely to seriously undercut HMOs in their lobbying
 against a Clinton administration plan to cut back on their
 reimbursements" (see AHL 1/22).
      NEW CALCULATIONS:  Currently, the government reimburses HMOs
 for 95% of the cost it would take to treat a person under fee-
 for-service; President Clinton has proposed cutting that figure
 to 90%.  The government, however, has not been able to
 effectively address the issue on a long-term basis because
 "Medicare spending varies tremendously."  The GAO report said
 that the "eventual goal should be a payment system that gives
 more money to HMOs that enroll large numbers of people with such
 problems as diabetes and congestive heart failure, and less to
 HMOs signing up senior citizens who are in good shape"
 (Rosenblatt, 2/26).