MEDICARE+CHOICE: HMOs Warn of Impending Doom
Health plans that serve Medicare beneficiaries warned yesterday that the federal government must increase reimbursements by more than $3 billion or risk their dropping out of the program. "No company can sell a product, even a health care service, without being paid as much as it costs to provide the product," said Ross McLerran, spokesperson for Humana's Western region. The managed care industry is asking Congress to restore some of the cuts in the Balanced Budget Act of 1997 "that squeezed Medicare payments to HMOs by $22 billion over five years." The HMOs, which will be paid about $40 billion next year, are also fighting an additional $11 billion in cuts slated to be phased in next year (Bloomberg/Ft. Worth Star-Telegram, 6/17). American Association of Health Plans President Karen Ignagni said Medicare+Choice "is on a glide path to destruction" and most members of Congress "are in denial" over the fact. While she did not estimate how many plans would exit the program, she predicted that "virtually every beneficiary is going to experience some kind of impact." Plans may freeze enrollment, raise premiums, or reduce benefits. "We're talking about seriously undermining this program across the country," said AAHP Vice President for Policy Rick Smith. Noting the "fairness gap" between reimbursements for fee-for-service Medicare and Medicare+Choice, Ignagni said by 2004, two-thirds of Medicare+Choice enrollees will live in counties where the fee-for-service plan will receive at least $1,000 more than its managed care counterparts (Rovner, CongressDaily, 6/16). She said, "While the Clinton Administration floats a trial balloon for an expensive new prescription drug benefit, its policies threaten to force health plans out of Medicare, and in the process, put in jeopardy the only option that already offers beneficiaries an affordable drug benefit" (AAHP release, 6/16). She added, "Health plans are fighting to provide their Medicare beneficiaries with choices, benefits and affordable costs. But politically motivated decisions threaten health plans' positive contributions to Medicare. This must stop." Health plans have until July 1 to decide whether they will remain in the Medicare+Choice program (White House Bulletin, 6/16).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.