MEDICARE NEWS

The Health Care Financing Administration today released the final Medicare+Choice regulation, which allows the agency to continue to ensure that Medicare beneficiaries enrolled in Medicare+Choice plans will receive quality health care without imposing new, unnecessary costs on the organizations that provide the care.

In addition, HCFA is planning to extend the transition period for risk adjustment responding to concerns of the health plans that there is a need for a more gradual phase in of risk adjustment to ease the transition to the new system and allow plans to respond to the incentives risk adjustment gives to enroll and retain sicker members.

Today’s announcements continue HCFA’s efforts to streamline the Medicare+Choice program. The new regulation improves earlier regulations by:

Increasing flexibility in establishing a provider network, which will allow more health care providers to serve plan enrollees;

Improving freedom of choice by allowing plans to offer beneficiaries a point of service option that broadens access to health care services from both in-network and out of network providers;

Allowing organizations that left Medicare+Choice to return in two years, instead of five; and

Easing compliance plan reporting by eliminating the self-reporting component of the Medicare+Choice program.

The regulation implements the Balanced Budget Act of 1997 (BBA) and includes provisions from the Balanced Budget Refinement Act of 1999 (BBRA) as well as responding to the hundreds of pages of comments received from advocates, the managed care industry and others on the interim final regulation which was published on June 26, 1998.

"Since the Medicare +Choice program was created in 1997, we’ve been working continuously to make sure that there is a wide range of health care options available to Medicare beneficiaries and to improve the operation of Medicare+Choice," said HCFA Administrator Nancy-Ann DeParle. "This is further evidence of our commitment to the beneficiaries who choose to enroll in managed care plans and to the organizations that provide health care services."

On June 8, 2000, HCFA issued the 2001 Medicare+Choice contract and marketing guide along with modifications to existing requirements for participation in the program to Medicare+Choice plans.

Medicare managed health care options have been available to some Medicare beneficiaries since 1982. About 70 percent of the more than 39 million seniors and disabled people covered by Medicare are in areas served by at least one managed care plan. About 6.2 million, or 16 percent of all Medicare beneficiaries, currently have chosen to enroll in a Medicare HMO. The BBA created the Medicare+Choice program to provide Medicare beneficiaries with a wide range of health care options and an information campaign to educate beneficiaries about those options.

The final regulation and proposed extension of the transition to risk adjustment demonstrate HCFA’s commitment to working with the Medicare+Choice organizations that contract directly with HCFA to provide care to beneficiaries. The regulation simplifies the requirements for health plans to participate in the Medicare+Choice program while ensuring that taxpayer funds are spent appropriately and that beneficiaries receive the benefits, protections and information they need and deserve.

The first phase of the risk adjustment method, which pays plans more for treating sicker enrollees, began January 1, 2000. Medicare+Choice payments are based in part on the illnesses reported on inpatient hospital bills. The original transition schedule for risk adjustment was modified by the BBRA and would have risk adjustment payments make up lower percentages of total payments than HCFA originally proposed. The BBRA also required that reports related to risk adjustment and its implementation be made to the Medicare Payment Advisory Commission on risk adjustment and HCFA. The specific phase-in schedule and blended rates will be announced next year, based on the reports and continued implementation of risk adjusted payments.

The regulation also includes a number of key elements that were part of the earlier Medicare+Choice regulations:

Strengthens the appeals process to ensure that beneficiaries have their appeals heard quicker, based on their health needs.

Simplifies the certification of payment data and adjusted community rate (ACR) submissions by Medicare+Choice Organizations which establish a "good faith" standard for the certification of data. Medicare+Choice organizations will now certify the accuracy of payment information to their "best knowledge, information, and belief."

Clarifies provider anti-discrimination rules that state Medicare+Choice organizations can no longer discriminate against providers based solely on the providers’ licensure and certification. However, this requirement does not preclude organizations from contracting with the providers they choose and setting their payment rates, consistent with their quality and cost control responsibilities under the statute.

Allows out-of-area Medicare beneficiaries to convert to a Medicare+Choice plan expanding upon the availability for a seamless conversion for those beneficiaries who wish to continue receiving health care services through their managed care organization when they become eligible for Medicare.

Implements the bonus payment program called for in the BBRA to encourage Medicare+Choice plans to begin to serve beneficiaries in areas that currently do not have Medicare+Choice options.

"And, in our further efforts to work with Medicare+Choice organizations, the President has put forth a legislative proposal that would modernize and strengthen Medicare and allow payment according to competitive market forces rather than a Congressionally-mandated formula," said DeParle. "The President’s plan would also create a substantially subsidized prescription drug benefit thereby providing financial assistance to both health plans and beneficiaries."

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Last Update: June 19, 2000