HHS Grants MCOs 10 Extra Weeks to Decide on Participation for Medicare+Choice Next Year

The Bush administration announced plans May 29 to allow managed care plans 10 additional weeks to notify the government of the areas where service will be offered under Medicare+Choice for next year, the Wall Street Journal reports. According to HHS officials, the additional time will allow Medicare managed care plans to collect cost data and other information before deciding whether to expand or reduce participation in the program. HHS also said that MCOs will not have to file data on outpatient physician and hospital visits, a requirement that health plans and doctors have called "burdensome" (Wall Street Journal, 5/30). Bush administration officials hope that the extended deadline will "persuade wavering insurers to stay" in Medicare, but USA Today reports that the move might "swing some plans the other way, particularly if they find expenses outpacing forecasts." Insurers have said that Medicare+Choice "doesn't pay enough in many areas" and have called the program "too complex" (Appleby, USA Today, 5/30). Last year, 118 MCOs withdrew from Medicare or to exit unprofitable markets, maintaining that they "couldn't afford to stay." About 934,000 Medicare beneficiaries were affected by the MCOs' withdrawal, according to HCFA. HCFA Administrator Thomas Scully said that next year, "as many as 3%" of M+COs could "drop out" of the program. "Those two regulatory fixes and more money are the things the health plans have been asking for," he said, adding that beneficiaries "won't be hurt" by the extension.

Seniors Left 'High and Dry'?
However, the Journal reports that the deadline shift "leaves less time for beneficiaries to find new coverage" if plans do drop out (Wall Street Journal, 5/30). Beneficiaries enrolled in plans that intends to exit Medicare+Choice will receive notices of the withdrawal by mail starting in November, the same time as last year, but many usually hear the news earlier through media reports or "local senior support agencies." The administration's changes will push the release date for that news from June to September (USA Today, 5/30). Families USA Executive Director Ron Pollack, fearing that the change in the MCO notification deadline could still mean less time for beneficiaries to respond to plan changes, said that the administration's plan could leave some beneficiaries "high and dry" and "scrambling" to replace prescription drug coverage that some Medicare managed care plans provide, but traditional Medicare does not. But insurers and health plans praised the rolled-back deadline. Karen Ignagni, president of the American Association of Health Plans, called the move "a good first step," but added that "there are still barriers to HMOs remaining" in Medicare+Choice (Wall Street Journal, 5/30). Saying the new deadline is a "step in the right direction," Health Insurance Association of America President Chip Kahn added, "Extending the deadline allows [Medicare+Choice] plans to better assess the impact of health care cost increases, and ... their ability to continue offering seniors affordable Medicare coverage" (HIAA release, 5/30).

Setting the Stage
USA Today reports that the Bush administration hopes to sustain Medicare+Choice as an "example that the private sector can provide coverage" to Medicare beneficiaries, an important part of the administration's Medicare reform proposals. "This is an important signal the administration is sending. This is the beginning of fulfilling a promise to making the program administratively workable," Ignagni said (USA Today, 5/30).