Medicare choices expanding
The Health Care Financing Administration (HCFA) has announced it will test the effects of greater market competition among Medicare managed care plans in the metropolitan Denver area. The Medicare Managed Care Competitive Pricing Demonstration project will use competitive bidding to set payment rates.
"This expanded information will help Medicare beneficiaries to be smart consumers," says HCFA Administrator Bruce C. Vladeck. "It should greatly improve their ability to choose the best health care option to meet their individual needs, whether it is a managed care plan or fee-for-service."
Six managed care plans containing more than one-third of the area’s Medicare beneficiaries will take part in the program. Denver’s managed care plans are paid slightly more than the national average under Medicare’s current payment system.
The demonstration will test how Medicare can take advantage of competitive market forces in setting rates it pays managed care plans. Plans will submit bids for providing Medicare benefits, and these bids will be used to set the rate Medicare pays. The bidding process will begin later this year, and the new rates will take effect by 1998. Currently, Medicare sets these rates through a statutory formula based on costs in the fee-for-service Medicare program. This method has long been criticized for ignoring the potential of competition among managed care plans to hold down Medicare costs.
Under the demonstration, which is expected to last three years, Medicare beneficiaries will have a guaranteed open enrollment period, slated for the fall of 1997, during which they will be able to enroll in any of the local Medicare managed care plans. A special contractor, not affiliated with any of the plans, will be available to help beneficiaries choose among the plans. Beneficiaries who want to remain in Medicare’s fee-for-service program or who are already enrolled in a Medicare managed care plan and want to remain in that plan will not need to take any action to retain their existing arrangement.
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