Provider groups were guardedly optimistic last week about a House Republican plan that would restructure the Medicare program to allow seniors to choose between traditional fee-for-service plans, managed-care plans and medical savings accounts.
Under the GOP plan, Medicare would contribute a set amount per beneficiary towards whatever plan the Medicare beneficiary chooses. That contribution would vary depending on the age and health status of the beneficiary, according to a draft of the plan that has circulated among health groups in Washington. The amount of Medicare's portion of the premium would be set based on bids from managed-care groups on a regional basis, according to the draft.
If a beneficiary were to choose a plan that cost more than the Medicare reimbursement, the beneficiary would pay the difference directly to the insurer. If a low-cost plan is chosen, the beneficiary would receive the balance from Medicare.
The plan also contains a number of short-term saving mechanisms that would affect hospital reimbursements. Those include reducing the hospital reimbursement update by as much as two percentage points, reducing disproportionate-share payments by between 20% and 30%, reducing indirect graduate medical education spending by an unspecified amount and reducing pay ment to hospitals for bad debt to 50%. The plan also suggests implementing a hospital outpatient prospective payment system.
Beneficiaries also would pay more under the plan. Additional copayments and deductibles would be added for home health and skilled-nursing facility care. High-income beneficiaries would pay higher Medicare premiums under the plan.
The GOP plan has many of the same aspects as several provider group plans that have been released recently (See related story, p. 17).
Thomas Scully, president of the Federation of American Health Systems, said the fundamental structure of the plan was positive but criticized the hospital reimbursement reductions as "way too big."
Charles Huntington, director of the Washington office of the American
Academy of Family Physicians, said the plan represented "the general direction that we expected them to go."
A Republican senator last week followed the House committee's lead in proposing Medicare reform that envisions greater reliance on a wide array of health plans, including managed care.
But the plan unveiled by Sen. Judd Gregg (R-N.H.), a leader on healthcare issues, does not propose greater cost-sharing or higher premiums for beneficiaries who continue to receive healthcare on a fee-for-service basis.