MEDICARE HMOS: HCFA Proposes Relaxed Rules, No Funding
With Medicare HMOs complaining about overregulation and underpayment, and just two weeks before health plans must decide whether to remain in the program, the Clinton administration moved Monday to pacify insurers USA Today reports. Many experts fear, however, that the move, which does not boost Medicare reimbursement rates, may not go far enough to stop plans from dropping coverage after the July 3 deadline. HCFA sent letters to health plans last week outlining the proposed reforms. "We want to be a good partner. We don't want to have unique and burdensome requirements," HCFA Administrator Nancy-Ann DeParle said. Although Karen Ignagni of the American Association of Health Plans applauded the changes, she insisted that the administration must increase payments to insurers. "We face a major crisis in the program," she said, adding that Medicare HMOs need about $13 billion over five years to "remain viable." Administration officials also confirmed a Wall Street Journal report that President Clinton will propose adding $21 billion to Medicare and Medicaid over the next five years, but none of that money is directly earmarked for Medicare HMOs (Appleby, 6/20).
Fast Action Needed
Several hundred thousand patients could lose coverage in the next few weeks if the government does not offer higher subsidies to HMOs, the Sacramento Bee reports. While no patients would lose basic Medicare coverage, many of the 6.2 million Americans enrolled in Medicare HMOs may forfeit prescription drug benefits or face higher premiums, health insurance industry lobbyists claim. "We have heard informally from many of our member companies that they intend to end their Medicare HMO plans," Richard Coorsh, spokesperson for the Health Insurance Association of America, said. According to the industry, Medicare HMOs dropped about 407,000 seniors nationwide in 1998, and an additional 327,000 patients lost coverage last year. "July 3 is the witching hour, and we will all watch with great attention. There's going to be a very large number of beneficiaries impacted," Bruce Fried of the pro-industry Health Law Group said (O'Rourke, 6/18).
A Congressional Solution?
With the November elections approaching, the House will consider competing plans this week to widen prescription drug coverage under Medicare. Republicans have proposed increasing HMO reimbursement levels, but Medicare officials claim that adopting a universal prescription drug benefit would better help managed care companies. While HMO executives remain wary of the GOP plan, they argue that the Democrats' proposal, which calls for a 50% copayment on drugs and a $1,000 per year maximum benefit, would prove "nearly meaningless." According to Dr. Marc Edelstein, senior vice president of medical affairs at AvMed, the plan would not "cover anybody with a significant illness. When you look at a $2,500 cap, then you're getting competitive," he said (Hundley, St. Petersburg Times, 6/18). Coorsh also opposes the Democrats' plan, arguing that Congress could relieve the strain on HMOs by increasing government payments that have languished under the 1997 Balanced Budget Act. The law limits the annual rise in Medicare payments to about 2% a year, although HMOs claim that costs have jumped 8% per year. Despite repeated pleas for higher reimbursement rates, the General Accounting Office and HHS argue that Medicare HMOs must "shoulder much of the responsibility for higher costs," citing their failure to achieve the savings they promised (Sacramento Bee, 6/18).