Scully Promises to Improve Medicare+Choice

Thomas Scully, administrator of the Centers for Medicare and Medicaid Services (formerly HCFA), hopes to "encourage" private health plans to participate in Medicare+Choice, Medicare's managed care program, and said that the "No. 1 issue is to put more money" into the program for HMOs, the Washington Post reports. During the past two years, the number of Medicare beneficiaries enrolled in Medicare+Choice has dropped from 6.4 million to 5.7 million. "Scores" of HMOs have exited the program, "complaining" about low reimbursement rates and high regulatory "burdens." Scully blamed the exodus on the "complex methodology" that Congress uses to set reimbursement rates for health plans, which favors rural areas where medical services cost less over urban areas. According to Scully, although increasing rates for rural plans "seemed like a good idea initially," higher rates "didn't bring more HMOs to rural areas," where doctor and hospital networks "are more costly to set up." In addition, he said that some HMOs left urban markets where rate increases "have been capped." Scully said that he "doesn't fault HMOs for fleeing" Medicare+Choice, adding, "If your expectation as a government is to keep these (HMOs) in the program, have them offer a drug benefit and other services to seniors and have a reasonable [profit] margin ... was it viable for many of them to stay in? I would say ... it probably was not." Scully said that he "can't control" Medicare+Choice reimbursement rates, which Congress sets. Still, he said, "There are a lot of worthy things about the Medicare+Choice program. And we're going to do the best we can to turn it around" (Brubaker, Washington Post, 8/10).