Higher Medicare+Choice Reimbursement Rates Take Effect

Effective March 1, the federal government will pay 5% more in reimbursement rates for managed care organizations participating in Medicare+Choice, with an additional 5.8% boost expected in 2002, HCFA officials said. The AP/Las Vegas Sun reports that the government hopes the additional funds, passed as part of the Medicare "giveback" package at the end of 2000, will attract more patients and prevent HMOs from exiting Medicare. In the past few years, about 1 million Medicare beneficiaries have lost supplemental health coverage as many HMOs, citing low reimbursement rates and "cumbersome regulations," have left the program. Phil Blando, a spokesperson for the American Association of Health Plans, called the increased rates "a positive step," but added that "more needs to be done." However, health advocates and some government officials have said that higher reimbursement rates alone will not help Medicare+Choice, arguing that many HMOs exit the program "for reasons other than money." The Medicare Payment Advisory Commission recently concluded that managed care organizations participating in Medicare receive "much more money" than non-managed care hospitals and doctors, and that there is "no evidence that more money retains private insurers" (AP/Las Vegas Sun, 3/1).