MINNESOTA: Judge Dismisses Suit Over Medicare Rates
A federal judge on Thursday dismissed a lawsuit filed last year by Minnesota alleging that Medicare's method for determining payment rates unconstitutionally discriminates against smaller states, resulting in insufficient reimbursement rates. U.S. District Judge Donald Alsop ruled that the system is "unfair" but does not violate the Constitution and said that Congress bears responsibility to make changes to the program, rather than federal courts. In regions where medical costs are high, Medicare reimbursement rates are usually high enough that Medicare HMOs can offer premium-free plans, but in lower-cost areas like Minnesota, payment rates fail to cover care costs, leading Medicare HMOs to charge premiums. Minnesota Attorney General Mike Hatch estimates that the state pays $1 billion every two years to make up for inadequate Medicare reimbursement (Richmond Times-Dispatch, 7/8).
Further Legal Action?
Spurred by Minnesota's suit and three insurers' recent decisions to withdraw from the Medicare HMO market, Washington Gov. Gary Locke (D), Attorney General Christine Gregoire and Insurance Commissioner Deborah Senn are considering filing suit against Medicare to protect Medicare beneficiaries' health coverage. In the past three years, more than 70,000 Washington residents have lost or changed managed care plans as a result of insurers' decision to eliminate Medicare+Choice products, the Seattle Times reports. Locke said the federal government is "punishing Washington for its health care efficiency," arguing that low Medicare reimbursement rates are driving some insurers and physicians out of the Medicare managed care market (Smokey, 7/8).