MEDICARE HMOs: Rural Seniors Get Fewer Benefits
Seniors living in counties with higher Medicare reimbursements are more likely to have access to higher-quality Medicare HMO coverage than seniors in rural counties with lower Medicare HMO reimbursements, according to a study in the latest issue of Health Affairs. Timothy McBride of the University of Missouri-St. Louis merged December 1996 data from the Health Care Financing Administration with data from the Rural Policy Research Institute to examine variations in Medicare managed care coverage at the county level (Nov/Dec 1998 issue). "The range of Medicare risk plans and the benefits they offer to beneficiaries is related to a great extent to the beneficiary's area of residence and the payment made to the managed care plan," McBride said (Health Affairs release 11/5).
Key findings from McBride's study:
- For counties with adjusted average per capita cost (AAPCC) reimbursement rates below $300 a month, Medicare HMOs covered prescription drugs in 2% of these counties, dental coverage in 1%, eye exams in 4%, lenses in 3%, ear exams in 4% and none covered hearing aids. Preventive care in these counties also lagged, with Medicare HMOs offering immunizations, preventive physicals and health education in only about 4% of these counties.
- For counties with AAPCC reimbursement rates above $500 a month, Medicare HMOs covered prescription drugs in 92% of these counties, dental coverage in 88%, eye exams in 95%, lenses in 40%, ear exams in 94% and hearing aids in 37%. Preventive care in these counties was considerably better than in counties with lower reimbursement rates. Medicare HMOs offered preventive immunizations and physicals in 95% of high-reimbursement counties, preventive foot coverage in 88% and preventive health education in 71%.
- Similar disparities existed between urban and rural counties, with Medicare HMOs offering the range of preventive services in only about 5% of rural counties. Preventive care coverage increased to 10%-20% of counties adjacent to urban areas, and climbed to roughly 50% to 80% in urban areas (Health Affairs, Nov/Dec issue).
- Paradoxically, Medicare HMOs with more generous benefits, clustered in counties with high reimbursement rates, also tended not to charge premiums (Health Affairs release, 11/5).
McBride notes that Medicare reimbursement rates ranged from $221 to $767 a month in 1997, prompting lawmakers to include in the 1997 Balanced Budget Act reforms aimed at closing the gap. Essentially, Medicare payments in counties with low reimbursements would rise more rapidly than those in counties with higher rates under the reforms (Health Affairs, 11/5). These changes should, over time, diminish the disparity in benefits offered, McBride concluded. Areas with historically higher reimbursement rates will likely see a reduction in benefits, higher premiums and slower growth of Medicare managed care as rates are squeezed under the reforms. Counties with historically lower rates should experience opposite changes. While McBride acknowledged that the 1997 reforms had been in place for only a short time when he conducted his study, early analysis showed "some evidence of plans dropping supplemental benefits from or adding them to the standard Medicare package." Between December 1997 and July 1998, 4% of Medicare recipients were enrolled in plans that dropped prescription drug coverage, while 2.6% enrolled in plans that added it. During the same period, 14% lost dental coverage while 11% gained it, 21% lost coverage for eye lenses and 12% lost coverage for hearing aids but none gained coverage for either.
In his conclusion, McBride writes, "Medicare managed care enrollees in plans that cover services that are not covered for other Medicare recipients ... pay less out of pocket for their medical care. ... [T]his amounts to a subsidy. Moreover, enrollees in Medicare HMOs have been shown to be favorably selected as healthier Medicare recipients. Put together, these findings have implications for the broader issue of long-term financing for Medicare, because the savings attributable to favorable selection are being used to purchase additional benefits for recipients rather than to reduce the deficits in the program as a whole." McBride's study was funded by the Robert Wood Johnson Foundation and the Rural Policy Research Institute (Health Affairs, Nov/Dec issue).