Will more insurers leave Medicare capitation?
HMOs seek more capitation funding
As the congressional budget season nears, managed care lobbies are threatening again to abandon the Medicare+Choice program if capitation payments aren't increased.
"What is needed is a $40 billion effort," said Karen Ignagni, president of the American Association of Health Plans in a press release. The $40 billion figure represents $15 billion above and beyond President Clinton's current budget recommendation of a $35 million increase for Medicare's capitation payments.
Another proposal is coming from Sen. Pete Domenici (R-NM), who recommends spending $3.7 billion over five years to boost the minimum payment received by Medicare capitation plans from a current average of $415 to $525, as well as an increase to $475 per member per month for beneficiaries in rural areas.
Current law allows for HMOs in capitated contracts to receive a 2% across the board each year, but HMO officials complain that 2% is less than the annual health inflation rate and inadequate to cover their costs.
In June, the Health Care Financing Administra-tion tried to ease HMOs' complaints. The June 29, 2000, Federal Register included a long list of changes for Medicare+Choice. (See related story, p. 135. Also, see Physician's Managed Care Report, August 2000, p. 119.) In the Federal Register notice, the agency touted these improvements:
• Slowing the pace of the new risk adjustment payment system's phase-in. Originally, the phase-in called for 50% of payments to be based on principal inpatient diagnostic cost groups. But, Congress intervened and asked for a slow-down; the new phase-in schedule will be determined in 2001.
• Increasing the flexibility in establishing a physician-based HMO, which would allow more physicians to serve capitated Medicare enrollees.
• Improving the freedom of choice by allowing plans to offer beneficiaries a point of service option that broadens access to health services from both in-network and out-of-network providers.
• Allowing MCOs that leave Medicare+Choice to return in two years, instead of five years.
• Easing compliance plan reporting burdens by completely deleting this part of the program requirements.
What patients should know
The tension mounts as the health care community observes whether Congress will make any more major changes during an election year; whether insurers are serious about dropping out more; and whether physician-based HMOs will enter more into the Medicare+Select market.
If more commercial insurers do drop their capitation patients, here are six key facts your patients need to know, advises Kent Moore, MD, manager of reimbursement issues for the American Acad-emy of Family Practice (AAFP), based in Kansas City, MO:
• Medicare+Select patients can't be kicked out of Medicare all together. If a capitation insurer drops out, those patients will be enrolled in another Medicare plan — either by their same insurer, or they can opt for a new one. Capitation patients are automatically added to Medicare fee-for-service, effective Jan. 1, 2001, if they don't enroll into some other option by Nov. 30, 2000.
• If patients are interested in a Medigap policy, they should inquire with their insurer at least by the end of November to ensure a Jan. 1, 2001, effective date.
• Patients currently enrolled in Medicare capitation must be covered by that plan through Dec. 31, 2000.
• If capitated Medicare patients learn that their insurer is dropping out of the program, they have a choice about what they can do. They should have all their questions answered before they make up their minds.
By September, recipients should receive any notification of changes by their insurer, and they have three months to make a decision. Plans also are responsible for providing them information on any Medicare and Medigap options.
• Patients enrolled in traditional Medicare or in plans that are not changing their contracts with Medicare are not affected.
• If a Medicare patient receives Medicare coverage via a former employer, he or she should contact that employer before making a decision about any new form of Medicare coverage.
Three key facts physicians should know if an insurer drops out of the Medicare capitation program in their area:
• Your relationship with a capitated Medicare may or may not end by Dec. 31, 2000, if an insurer drops its Medicare+Select activities. If the patient chooses a plan with any insurer with which you contract, then you can keep the patient under your care.
• If the patient informs you of an insurer's plan to drop out, be sure to follow-up and determine what kind of impact the insurer's action will have on your practice.
• If your patient asks about the issue, physicians are permitted to describe other Medicare managed care plans with which they are involved. But HCFA discourages physicians from providing application forms for those plans or in any other way steering patients toward particular plans with which they participate.
Sources of information
Here are official sources you can refer patients to regarding the Medicare+Select program:
• Medicare+Choice Help Line: (800) 633-4227. This number has both English- and Spanish-speaking customer service staffing the telephones.
• For the hearing impaired using a telephone device for the deaf: (877) 486-2048.
• Both are toll-free numbers that are staffed Monday through Friday from 8 a.m. to 4:30 p.m. during the caller's time zone.
• The two government-based Web sites are www.medicare.gov, which is geared mainly for patients, and www.hcfa.gov, which contains more technical information and is geared more toward physicians, practice administrators, and other professionals involved in Medicare.
(Moore's points were summarized from several articles on Medicare and capitation by Kent Moore, MD, featured monthly in the AAFP's journal, Family Practice Management, 1999 and 2000, Kansas City, MO.)
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