A HCFA demonstration project to test competitive pricing for Medicare HMOs scheduled to begin in Baltimore early next year likely will be delayed because of concerns by managed-care plans and federal lawmakers.
The plans say they were not consulted by HCFA during the planning of the program and are working with Maryland lawmakers to try to block implementation of the project.
The long-awaited program would require all six managed-care plans that currently contract with Medicare in the Baltimore area to submit bids for a HCFA-produced standard benefit package, said Barbara Cooper, HCFA acting director of research and demonstrations.
According to HCFA, there are nearly 10,000 Medicare beneficiaries currently enrolled in managed-care plans in the Baltimore area.
After all the bids are received, HCFA plans to choose one. All plans that submitted a bid higher than the chosen bid will be required to charge the difference between the plan bid and the chosen rate as a premium to beneficiaries. Those coming in at or below the chosen rate will be able to offer the benefit package premium-free.
For example, if the six plans enter bids ranging from $400 to $700 a month and HCFA selects $550 a month as the standard rate, the plan that bid $700 would be required to charge a monthly premium of $150 to beneficiaries. By contrast, the plan that bid $500 a month would offer the same benefit package at no premium.
"Basically that puts those plans above the HCFA rate out of business," said Deron Johnson, legislative analyst for the Maryland Association of HMOs which represents the state's managed-care plans.
After being contacted by the managed-care group, Rep. Benjamin Cardin (D-Md.) wrote to HCFA asking for a series of meetings to discuss the demonstration project. The first such meeting was scheduled for late last week.
An aide to Cardin said HCFA had pledged to hold off implementation until lawmakers support the project. The aide added that the time needed to address the concerns of lawmakers would likely delay the start of the program.
Cooper acknowledged that delaying the start of the project was "a possibility."
Another problem that has yet to be settled, according to Johnson, is the fate of three managed-care plans that already have applied to HCFA to enroll beneficiaries but have yet to be accepted.
"Those three and other plans may just choose to move out of Baltimore rather than be a part of this," Johnson said.