MEDICARE NEWS

Federal payments to Medicare+Choice managed care organizations are expected to increase in calendar year 2002, with floor counties expected to see increases by as much as 5 percent, the Health Care Financing Administration announced today.

Today's announcement describes the preliminary estimates of the growth in expenditures in the Medicare+Choice program and the increase in the floor payments as required in the Medicare, Medicaid and SCHIP Benefits Improvement and Protection Act of 2001 (BIPA) signed into law in December, 2001. The increase also reflects an adjustment for changes in the growth estimates for previous years. The new rates will be announced on March 1, as required by law.

"Every Medicare managed care plan will see an increase in its year 2002 rates," said HCFA Acting Deputy Administrator Robert A. Berenson, M.D. "These increases should help strengthen the Medicare+Choice program, for both the plans and the beneficiaries who choose to enroll in those plans."

Under the BIPA, a Medicare+Choice organization can qualify for a new entry bonus if it is entering a county where there had been no Medicare+Choice plan since 1997 or all the plans serving that county had left the program as of January 1, 2001. The first M+C plan offered in such a county receives a 5 percent bonus payment during its first 12 months in that county and a 3 percent bonus payment during the second 12 months.

The BIPA also directed HCFA to continue to apply the 10 percent risk adjusted payment that had been used in 2000 and 2001. Risk adjustment is the payment process that pays plans more for treating sicker patients. In 2002, the M+C payment will be based on a formula where 10 percent of the payment is risk-adjusted and 90 percent is based on demographic adjustments.

Today's announcement also clarifies the deadlines that Medicare+Choice organizations must meet in submitting encounter data for processing under risk adjustment.

And, beginning in 2002, Medicare+Choice organizations will be able to receive extra payments for providing care for patients with congestive heart failure outside of the hospital according to recognized standards. To qualify for these payments, organizations must meet levels on two quality indicators to ensure that proper diagnostic and treatment procedures have been followed.

As one of the most frequently billed inpatient diagnoses, congestive heart failure is unique in the degree to which it can be successfully managed on an outpatient basis. As of January 1, 2001, more than 5.5 million of the more than 39 million Medicare beneficiaries have chosen to enroll in managed care plans.