Medicare+Choice Program Faces Increased Costs, Fewer Services in 2002
Many health plans will withdraw from Medicare+Choice next year and those that do not will likely increase costs for beneficiaries and reduce services, CMS Administrator Thomas Scully told the House Ways and Means Subcommittee on Health yesterday, CongressDaily/AM reports. According to Scully, 60.5% of Medicare beneficiaries will have access to a Medicare HMO next year, down from 74% in 1998, and only 50% of beneficiaries will have access to a health plan that offers prescription drug coverage, down from 65% in 1999 (Rovner, CongressDaily/AM, 12/5). In addition, many Medicare+Choice plans that offer a prescription drug benefit will shift coverage from brand-name drugs to only generic treatments (MacDonald, Hartford Courant, 12/5). Scully added that beneficiaries who participate in Medicare+Choice will likely face increased out-of-pocket costs. In 2002, 32% of Medicare HMO enrollees will have to pay premiums that exceed their monthly Medicare Part B costs by more than $50, up from 14% this year, Scully said. "Plans with both zero premiums and no significant beneficiary cost sharing have largely disappeared. In addition, plans are offering less generous drug benefits," he said (CongressDaily/AM, 12/5).
Scully and HMO officials "blame" low Medicare+Choice reimbursement rates for the increase in costs and reduction in services (Hartford Courant, 12/5). "Between 1998 and 2002, Medicare+Choice rates increased 11.5% in counties that received the minimum payment update," while spending on traditional fee-for-service Medicare increased 21%, Scully said (CongressDaily/AM, 12/5). He also said that annual increases in Medicare+Choice reimbursements "have failed to reflect rising health care costs." According to Scully, "Unfortunately, as a result, plans that wish to stay in the program are left with two options: reducing benefits or increasing beneficiary cost-sharing" (Hartford Courant, 12/5). However, a General Accounting Office report released Monday found that increased reimbursements for health plans that participate in Medicare+Choice have not stopped the withdrawal of HMOs from the program and have had "little effect on the number of [Medicare] beneficiaries with access" to managed care plans. The GAO report also found that many health plans have used the additional funds to increase reimbursements to hospitals and health care providers, but "relatively few" have improved benefits for beneficiaries (American Health Line, 12/4). The GAO report provided Ways and Means Health subcommittee members with "new fuel to fight" increased reimbursements for Medicare HMOs. "More money doesn't equal better benefits or a bigger or stable program. This report makes that clear," Rep. Pete Stark (D-Calif.), ranking member of the subcommittee, said (CongressDaily/AM, 12/5).