Medicare HMO Bid Process Put On Hold
Special E-Mail Bulletin
In previous bulletins I've brought you information on Medicare Risk HMOs and the problems many of them have been having with the government's funding structure. I've also mentioned a proposed bid-for-business scenario that was targeted for trial in Kansas City and Phoenix.
That experiment has now been shelved, at least temporarily. Here is an article from the Kansas City Star a few days ago.
Regards to all
Gil Weber
Medicare competition project for KC and Phoenix delayed a year
By ALAN BAVLEY - The Kansas City Star
Date: 07/22/99 22:15
A federal panel on Thursday postponed for one year a plan to require Kansas City and Phoenix health maintenance organizations to bid for Medicare business.
The five-year demonstration project was to have started Jan. 1, 2000.
The project is designed to determine whether the government can save money by subjecting Medicare HMOs to market competition. It has faced opposition in both cities from health insurance plans and doctors who say it would cause widespread disruption of services to beneficiaries in HMOs.
In the Kansas City area, about 55,000 Medicare beneficiaries belong to HMOs.
All four senators from Kansas and Missouri lobbied Medicare for the one-year postponement.
The senators also supported an amendment to a patients' rights bill passed by the Senate last week that would bar Medicare from using Kansas City or any part of Arizona as competitive-bidding demonstration sites. The bill awaits action in the House.
The Competitive Pricing Advisory Committee, which oversees the demonstration project, had rebuffed requests by leaders of the Phoenix project for a one-year postponement.
But at a meeting Thursday at the Kansas City Airport Marriott hotel, the panel heard requests from both the Phoenix and Kansas City advisory committees for a delay.
Members of both the Kansas City and the national committees expressed concern that there was not enough time left this year to educate beneficiaries and doctors about the changes the demonstration project would make in Medicare.
They also questioned whether Medicare was adequately prepared to help beneficiaries if competitive bidding forced large numbers of them to change HMOs or seek new doctors.
"We think this is an important project," said James Cubbin, executive director of health-care initiatives for General Motors and chairman of the national panel. "This (delay) will give the project more time to be successful."
Deborah Jantsch, president of the Metropolitan Medical Society of Greater Kansas City, a doctors group that lobbied heavily for the delay, said she was pleased with the outcome.
"They recognized the local folks are so important to this process," she said. "Physicians do want to be involved in this transition."
But E.J. Holland Jr., chairman of the advisory committee guiding the project in Kansas City, said the postponement ended the bidding initiative.
"This kills it," said Holland, vice president for corporate benefits of Sprint Corp. "It's nothing about health-care policy. It's all about politics. It's a messy process, but it's the way things are done in this country."
The demonstration project was mandated by Congress in the Balanced Budget Act of 1997 to determine whether market competition could help save the financially ailing Medicare system.
Under current rules, Medicare HMOs are paid a monthly amount set by the government to take care of each patient they enroll. These fees vary by location and are based on the average local costs of traditional fee-for-service Medicare.
Some experts have criticized this method, saying it often pays HMOs far more than it costs to take care of patients. In cities such as Miami and Los Angeles where payments are particularly high, Medicare HMOs have been able to offer their members benefits that are lavish compared with fee-for-service Medicare.
The demonstration project aimed at changing this system by having HMOs bid on a single package of benefits.
The standard package for Kansas City would have included coverage of prescriptions drugs, a benefit not provided in fee-for-service Medicare. Also included were office visits to primary-care physicians for $12, and a $70 allowance for eyeglasses.
These benefits are generous compared with those received by Medicare beneficiaries in many other areas, said David Durenberger, a former U.S. senator from Minnesota and member of the demonstration project's national advisory committee.
"The seniors ought to be outside the door saying, `Don't delay.' They don't realize how good (a benefits package) they'd be getting," Durenberger said. "For Kansas City, it would be ... a mistake not to be the first to do competitive bidding."
Durenberger said he did not think it was necessary to delay the project, but "there are powerful forces in health care that do not want to bid on price."
Many doctors dislike managed-care plans such as HMOs, Durenberger said. Health plans do not like competing on price. And many politicians are uninformed about the issues, he said.
"There are no champions for change," Durenberger said.
All content © 1999 The Kansas City Star
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