Physician's Capitation Trends-Payer bailout continues from Medicare+Choice
Physician's Capitation Trends-Payer bailout continues from Medicare+Choice
The grim news of desertion of Medicare-HMO contracting by payers continues to plague
the Health Care Finance Administration (HCFA). In preparing their business strategies for the
year 2001, some of the nation's largest insurers announced recently their intention to drop out
of Medicare+Choice (M+C), the government capitation-driven plan for seniors.
In response, HCFA officials say it's a natural reflection of sweeping changes aimed at improving the program overall, as well as to the national trend of stagnant HMO growth.
Recently, Foundation Health Systems (FHS) of Los Angeles; Aetna US Healthcare of Blue Bell, PA, and Oxford Health Plan in Trumbell, CT, announced their departure from Medicare capitation — blaming their pull-out on inadequate reimbursement from the federal government.
Apparently none of the payers making the announcement, however, are pulling their Medi-care+Choice contracts completely, but rather in certain localities where they feel reimbursements aren't adequate. FHS pulled out of some areas, said Jay M.Gellert, president and CEO, in a prepared press statement, so that the company could afford to stay in Medicare markets in other areas. And, other payers are expected to announce their plans to ditch Medicare+Select throughout the summer.
The companies' departures were expected, since the Medicare+Choice program has been a key complaint among members of the managed care biggest lobby, the American Association of Health Plans (AAHP), based in Washington, DC.
Medicare officials respond in two ways:
• saying there is no reason to believe the program is dying when in fact it is still growing overall;
• maintaining that many of the localities where insurers are dropping out actually are receiving higher capitation payments, which casts suspicion on whether cost is the driving factor.
Medicare says payment levels are not the only reason for the departure of the plans because in some these same areas payments have either gone up or will be going up. "Payment is rising in all counties this coming year [FY 2001] by an average of 5%, and will rise by as much as 18% in some areas," HCFA officials wrote in the June 29, 2000, Federal Register notice on new Medicare capitation rules.
"BBA [Balanced Budget Act] payment reforms were designed to increase payment in counties that had the lowest rates, and therefore the fewest number of plans," the regulation points out. "Yet counties receiving the largest increases under the BBA payment system are experiencing the most disruption. Plan withdrawals are affecting 11.1% of enrollees in counties where rates are rising by 10%, but affecting only 2.3% of enrollees where rates are rising by just 2%."
Overall, HCFA officials seem to view highly touted payer departure from Medicare+Select not as a knock against the risk-adjustment system, but rather the natural turmoil associated with such sweeping changes. "While several states have experienced a significant loss of access to M+C plans, other states have seen access to M+C organizations increase," HCFA officials wrote in the regulatory notice. "In addition, the M+C program continues to grow despite challenges that parallel those in the large managed care market in the United States.
"As of January 2000, there were 6.2 million M+C enrollees, representing over 16% of the more than 39 million seniors and disabled Americans in Medicare." Total Medicare managed care enrollment has doubled in the past four years — from 3.1 million in 1995 to 6.9 million in FY 2000."
However, the rate of growth indeed has stagnated, officials noted, and is now registering at a 1% growth rate in recent months, HCFA officials report.
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