HCFA officials say the second Medicare managed-care competition project, to be conducted in Denver, will not fall victim to the type of problems that have stalled the first demonstration project in Baltimore.
But at least one Denver-area plan is skeptical and already is voicing concerns about the program.
The Denver area has six managed-care plans that have HMO risk contracts with Medicare. Total Medicare enrollment in those plans is about 70,000. Another 135,000 beneficiaries in the market have traditional Medicare coverage.
Under the demonstration project announced last month, HCFA will require the plans to submit bids to the agency by April to cover beneficiaries with a HCFA-produced standard benefits package, said Michael Hupfer, director of delivery systems and financing in HCFA's office of research and demonstrations.
That benefits package may include benefits not in the standard Medicare package for HMOs.
HCFA will then determine a payment rate based on the bids and require the plans to accept the payment rate or lose their Medicare contracts.
A similar plan was announced for Baltimore last year but has been delayed due to complaints from Baltimore-area plans and Maryland lawmakers. A HCFA spokeswoman said the Baltimore project is still moving forward but may not start this year.
To overcome objections that have crippled the Baltimore test, any Denver plan that accepts the HCFA-determined payment rate won't have to charge beneficiaries the difference between that rate and the rate included in the plan's bid. Denver plans will have the option of reducing costs, eating the differential or charging beneficiaries.
In Baltimore, the contracting plans are required to bill beneficiaries for the balance of the bill, a penalty that the plans said would make it impossible to remain competitive with zero-premium plans.
"We hope that (the Denver program modification) will overcome some of the objections," Hupfer said.
Despite the changes, one Denver plan isn't supporting the project.
"We have a well-functioning system now," Val Deen, M.D., medical director of FHP, Denver's largest HMO, told the Associated Press. "Yet (HCFA) wants to come in and turn this thing on its ear."
The Denver project is scheduled to begin Jan. 1, 1998, and run for three years.