MEDICARE REIMBURSEMENT: Risk-Adjuster To Be Phased In
The Clinton administration will phase in the new risk-adjuster for Medicare HMO reimbursements over five years rather than introducing it all at once next year as scheduled, a move that the administration said "will save health plans $1.4 billion next year and $4.5 billion over five years." According to the administration, immediate adoption of the risk-adjuster would have reduced payments to managed care plans by 7% or $1.6 billion, next year. The phase-in means payments will be reduced by less than 1% or $200 million. The Wall Street Journal reports that the move is designed to mollify managed care plans -- which want "the risk-adjustment effort postponed" -- after more than 40 pulled out of Medicare due to what they called insufficient reimbursement. However, American Association of Health Plans President Karen Ignagni said the postponement was not sufficient, noting that "risk-adjusted payments would 'affect plan payments dramatically in future years, affecting our ability to meet the needs of seniors" (McGinley, 1/15). Ignagni added, "At a time when seniors enrolled in Medicare+Choice are already grappling with an uncertain future, the administration's announcement that it intends to proceed with phased-in reductions in payments to Medicare+Choice HMOs only makes sense if the goal is preservation of the costly and inefficient Medicare fee-for-service system" (AAHP release, 1/15). Others voiced displeasure that the new system was being delayed at all. In a letter to Health and Human Services Secretary Donna Shalala, Rep. Pete Stark (D-CA), ranking member of the House Ways and Means Committee, said, "I strongly urge you to phase in the adjustment as rapidly as possible -- certainly no more than two or three years." He noted that "Medicare continues to lose money on its managed care/HMO program," and that "[r]isk adjustment is the method by which we will finally stop overpaying the plans that have managed to attract a disproportionate number of healthy members" and reward those that treat "sicker, chronically ill patients" (Stark letter, 1/14). The Journal reports that the administration will also make some other changes to Medicare+Choice requested by managed care plans, including "plans to clarify and ease some new regulations that apply to Medicare HMOs" (1/15).
Hey, Us Too
Hospitals are weighing in on reports that the Clinton administration may be looking at additional cuts in Medicare hospital reimbursements. Both the New York and New Jersey congressional delegations have sent letters to President Clinton protesting any move to cut payments to hospitals, noting that providers across the board are already struggling with the payment cuts made under the Balanced Budget Act. Clinton also received letters from Sen. John Rockefeller (D-WV), Rep. Charles Rangel (D-NY) and Rep. Pete Stark (D-CA), the ranking members of key congressional committees dealing with health issues, expressing concern about media reports of the cuts and protesting any move to use the savings to "finance initiatives that do not contribute to the long-range solvency of the Medicare Part A Trust Fund" (AHA release, 1/14).